BMW’s all-new 180-hp, 2.2-liter inline six—that will first appear on the next-generation 3 Series due by this time next year

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BMW delays American sales of 1-Series</A>

CEO blames dislike of hatchbacks in U.S.
April 10, 2004

BY JEFF GREEN
BLOOMBERG


Bayerische Motoren Werke AG,the world's No. 2 luxury automaker, delayed U.S. sales of a new entry-level 1-Series car because the initial hatchback model was unlikely to appeal to buyers, the company's CEO said this week.

&quot;Americans don't like hatchbacks, and we are still deciding what the best model for the next 1-Series should be,&quot; BMW CEO Helmut Panke said in New York. The car's next version will be sold in the United States, he said, without giving a schedule.

BMW, seeking to replace DaimlerChrysler AG'sMercedes as the top-selling luxury brand, has introduced new models such as the X3 sport-utility vehicle and the $70,000 6-Series sports coupe to win buyers, particularly in the United States. BMW has led Mercedes in the United States since 2001 and trails Toyota Motor Corp.'s Lexus.

Munich-based BMW is building a factory in Leipzig, Germany, to free capacity in plants for the 1-Series model, which it will introduce this year in Europe. The car will compete with the Audi A3 and the Mercedes-Benz A-Class, neither sold in the United States.

Since 1990, sales of hatchback model cars in the United States have never exceeded 4.7 percent and typically don't top 2 percent, Lexington, Mass.-based Global Insight Inc. reports. Hatchbacks, with two passenger doors and a door, or hatch, in the back, accounted for 225,000, or 1.4 percent, of 16.6 million cars and trucks sold last year, Global Insight said.

&quot;There have been negative connotations for hatchbacks because they were seen as cheap, like you couldn't afford a car with four doors,&quot; said Global Insight analyst Rebecca Lindland. &quot;The attitudes are changing with younger buyers, but the automakers still remember they were unpopular.&quot;

BMW introduced a 3-Series hatchback, the 318t, in the United States in 1995, and sales peaked at 7,235 in 1996, Global Insight said. Sales fell every year after that to 700 in 2000, the last year for U.S. sales, Lindland said.

&quot;Our success with the 318t many years ago was less than we expected,&quot; said Tom Purves, BMW's North American CEO. &quot;From our perspective, there is not yet a natural hatchback market&quot; in the United States.

Mercedes also will introduce a station-wagon version of a redesigned A-Class, specifically built for the U.S. market, in 2005, spokeswoman Donna Boland said. The A3 is scheduled to go on sale in the United States next year.

BMW sold 36,000 Minis, also a hatchback, last year and may reach 40,000 by 2005 by adding a convertible this year, Jack Pitney, head of Mini's U.S. unit, said.

MINI sells because Americans don't know it's a hatchback, Purves said. BMW will have a 1-Series U.S. model by 2010 and may be sold in the style of a sedan, coupe and convertible, he said. &quot;The reason there is a question mark about 1-Series is that it takes us back into a size we've been out of. It takes us to a price point we haven't been to in a long time with BMW,&quot; Purves said. &quot;Our view is we can.&quot;