Check out this interesting article at Motor Trend Online. Goldman Sachs thinks BMW is losing money on every MINI, and is looking for Peugeot to help them out. BMW denies it.

Don't know about the rest of you, but I wouldn't even ride in a French engineered/produced taxi. I hope BMW is telling the truth on this one.

 

Soopa,

BMW/MINI announced late last summer that they WOULD be developing future MINI motors with Peugeot. However, the Motor Trend piece seems to be based on rumor and innuendo regarding them losing $$$ on every MINI. In my never-ending research on all things MINI, I recall reading that the dealer makes a minimum of $2000 on each MINI sold. My read on this Motor Trend item is that it is automotive gossip! It just doesn't sound kosher to me...

Cheers!
Clover

 

Greetings, BMW will proboably make out just fine when we get parts and service over the lifetime of our Minis. They'll be making a profit.

 

>> Don't know about the rest of you, but I wouldn't even ride in a
>> French engineered/produced taxi.

I'd buy a Peugeot 206 if they sold them in the US. If you've seen any WRC rally racing these last three years, then you'd know the Peugeot is a very tough cookie.

1985, 1986, 2000, 2001, 2002 World Manufacturer's Champion

Look at the Team Championship stats here:
Rally Championship standings

Look also at the individual championship results for 2002.
1st place: Markus Gronholm (77 pts) Peugeot
2nd place: Peter Solberg (37 pts) Peugeot
3rd place: Carlos Sainz (36 pts) Ford

 

Six passenger car (BMW, DaimlerChrysler import, Fiat, General Motors import, Lotus, and Porsche) and four light truck manufacturers (BMW, Ford, General Motors, and Volkswagen) are projected to fail to achieve the levels of the MY 2001 CAFE standards. Some MY 2001 CAFE values may change when final figures are provided to NHTSA by EPA in mid-2002. In addition, several manufacturers are not expected to pay civil penalties because the credits they earned by exceeding the fuel economy standards in earlier years offset later shortfalls. Other manufacturers may file carryback plans to demonstrate that they anticipate earning credits in future model years to offset current deficits.
BMW pays the most in CAFE fines and always ranks worst. $27,380,342USD in 2000. The Mini should take a bite out of that.

 

2minis, I did not even THINK about that clever trick of juggling the books by tossing a low priced fuel efficient car into their stable. Doesn't even require an Arthur Anderson accountant to make that plan look great on paper!

My thought was that BMW has built a car that will be a legendary racer, and that they do not have to make an incredible profit on the MINI in the short term, as the MINI will be immensely popular for many years and will be a great way to get Gen-X and Y to buy their first cars at a BMW dealership rather than at a VW/Audi dealership as many of us have in the past decade or so.

The number of people crossing over from http://www.vwvortex.com and recognizing my screen-name here just goes to show that there must be some kind of trend here that VW/Audi is NOT addressing with their plans for bigger, heavier Golfs and Jettas when they launch their new Mark5 platform soon, and the upcoming convertible New Beetle launch is unfortunately about 3 years late to make much difference.

In the past, when I have gone into my VW/Audi dealer with my GTI, my tendency is to drool on the Audi S4's, but I have never been in a BMW dealership to check out an M3. Somehow I get the feeling that BMW does not really care if they make much off of selling a MINI to me as long as they know that my MINI will only be my first BMW of many. . . .

_________________
~Yucca Patrol~

2003 MCS, BRG/W on the truck to my dealer!

"Good judgement comes from experience, and experience comes from bad judgement."

 

>>In the past, when I have gone into my VW/Audi dealer with my GTI, my tendency is to drool on the Audi S4's, but I have never been in a BMW dealership to check out an M3. Somehow I get the feeling that BMW does not really care if they make much off of selling a MINI to me as long as they know that my MINI will only be my first BMW of many. . . .

Economics 101

 

 

Though I'd guess you have to take the news about Peugeot in MT with a grain of salt, it's true that BMW is losing money on MINIs and will for a long time. And this has nothing to do with how popular it is or how much profit is in each car.

The reason is that BMW pumped tons of money setting up MINI is England. If you include the money spent on the Rover Group, then lost, the amount of money lost is even greater. BMW just spent wads getting this off the ground and will only recoup after many successful years.

Just think of it this way: The MINI, because it's great, is reducing that huge loss with every sale!

 

A couple of weeks ago, someone at work left an atricle from the Wall St Journal on my desk. I was about BMW's US financial results. It said that MINI is selling better than expected but is bringing down profits on a per vehicle basis. Why? Because even though MINIs are all being sold at a profit, the margins are MUCH lower than on regular Bimmers.

 

>> .... the margins are MUCH lower ...

this is true for any small car, and that is why so few have the level of 'trim' that the MINI has; no small line has paid for itself unless left in production for many years - they all are stepping stones to the bigger ones.

 

>>BMW=BUY MY WIFE

BMW...Bring My Wallet...

 

Yeah, they might be losing some money, but BMW knew this from the start...1994. They NEED this car! The Federal laws here in the states demand it. What a perfect way to break into this market by using the Mini. BMW might have bombed out by introducing that series 1 Bimmer too soon. This way it is a gentle intro for all of the car snobs who might have a fit when they see a real BMW priced under 25 grand.
Motor On!!

 

It is common for all European car makers to lose money on new introduced cars to the US market the first couple of years. This is not new to BMW or for Mercedes, VW, or others as well.

They knew they would lose money in the short run, but get tons of profits in the long run.

The MINI was artificially lowered in price upon introduction to build brand loyalty. Look for the numbers of MINIs imported to increase every year, and also look for the MSRP price to also go up. This is common practice for European car makers.

 

Let's look at:
1. dealers are charging MSRP and above;
2. Mini owners are buying A LOT of dealer-installed options that are high profit items;
3. volume is more important then profit per car; and
4. a larger and more-likely-to-pay-a-high %-for-financing demographic (not to mention as long as 60 months). Most other car dealers have to do 0% financing for God's sake!

I think the Mini's intro is like manna (sp?) from heaven for BMW in this economy. Don't start a collection for them yet!

_________________
Freezing my tail pipe off in Chicago. Brrrrr! Wait listed for a 2003 Cooper S. Still debating options (Suggestions?).

"We're on a road to nowhere. Come on inside. Takin' that ride to nowhere. We'll take that ride."

 

>>A couple of weeks ago, someone at work left an atricle from the Wall St Journal on my desk. I was about BMW's US financial results. It said that MINI is selling better than expected but is bringing down profits on a per vehicle basis. Why? Because even though MINIs are all being sold at a profit, the margins are MUCH lower than on regular Bimmers.>>>>>>>>


Talk about economics 101!

 

wow... i'd never think of this stuff on my own... thanks for the mind-expansion project.... :smile:

 

Just a little more info I was able to find today...

http://biz.yahoo.com/prnews/021203/nytu105_1.html

BMW/MINI news link

 

BMW="Break My Window". They had the highest break-in figures for several years running.

2

 

>>Just a little more info I was able to find today...
>>
>>http://biz.yahoo.com/prnews/021203/nytu105_1.html
>>
>>BMW/MINI news link


Thanks for the link. Very interesting to see the numbers.... only 21,312 MINIs (and counting) in the US thus far - WAY COOL!

I have to admit that my biggest disappointment with this vehicle will be realized if it becomes another PT Cruiser or New Beetle as far as popularity and quantity are concerned. I'm not saying that I would do anything drastic (like dis MINI or dump Molly) but I will be disappointed if, in a few short years, there's a MINI at every corner.

 

>>I have to admit that my biggest disappointment with this vehicle will be realized if it becomes another PT Cruiser or New Beetle as far as popularity and quantity are concerned. I'm not saying that I would do anything drastic (like dis MINI or dump Molly) but I will be disappointed if, in a few short years, there's a MINI at every corner.

Not to mention what it will do to the trade-in value when we go to buy a new Mini!

_________________
Freezing my tail pipe off in Chicago. Brrrrr! Wait listed for a 2003 Cooper S.

"We're on a road to nowhere. Come on inside. Takin' that ride to nowhere. We'll take that ride."

 

Slick.

I'll add another factoid, dealers make most of their money on service followed by accessories and other "stuff". Profit on "cars" themselves is minimal. I read somewhere that BMW is making more on MINI after-market product sales than it is on its BMW models.

In any case, the economic scenario has to consider the whole "profit per customer lifetime" including toys, service and the next car, presumably a BMW. Add the "environmental fine" angle, and the value of diversifying BMW's product portfolio by adding a low-end car that will sell great in any economic downturn (that might slam the Z3 et. al), and you've got a pretty compelling argument. MINI may bring down earnings per share in the short-term because of the heavy investment and low margin, but they'll make it up in the long-run. That does imply that BMW will want to sell the hell out of this car if it's not making its numbers... so tell your friends to buy lots of MINI toys!

 

::The MINI was artificially lowered in price upon introduction to build brand loyalty. Look for the numbers of MINIs imported to increase every year, and also look for the MSRP price to also go up. This is common practice for European car makers. ::

Look at how the Saturn was introduced in the late 80's. Same concept, build brand loyalty and then raise the price.

 

BMW isn't loosing money in the States. It was unexpected that the majority of US buyers would want the Mini"S". (Which means more money) Getting an American to wait for months for such an economic and allround car is a real accomplishment. We only have patients when we really want something.
BMW had to add extra shifts to keep up with the demand for either Mini.
If they loose any money it will be because of the wait to get one.
I know it will be crazy when they come out with the factory 200+hp Mini being contemplated at this time.
BTW-If you haven't bought the January issue of "European Car," get it. Much adue about the mini and where to get parts.

_________________
Minian (^-^)

 

>>Thanks for the link.

You're welcome... :smile: