Joe Ricardo

APUS

Bus 620

10/10/2015

BMW the Top Selling Luxury Brand

BMW Growth

BMW’s growth has been fueled by the resurgence in the American and global economy,

innovative marketing, and brand recognition. While economic recession of 2007/08 hit all

automobile companies hard, BMW was able to ride out the recession and eventually come out at

the top of the luxury automobile market here in America, as well as around the world (Boston,

2015). This was not the first and probably not the last time they overcame turmoil in the global

economy.

BMW Marketing

BMW’s innovative marketing strategy has also helped them outsell their competition.

They market to a niche group of people who want to differentiate themselves along with their

automobile from the crowd. The BMW symbol is a sign of luxury and affluence in society, and a

person who can customize their automobile to differentiate it from the rest separates themselves

from the crowd as an individual who can afford the luxuries of life. BMW will also deliver the

automobile to the customer after it has been completed within only a few weeks.

The BMW Group has also been able to capitalize on advertising their cars via Hollywood

movies such as the James Bond movies, such as Golden Eye, Tomorrow Never Dies and The

World is not Enough in the 1990’s. Then as recently as 2011 they were able to market their

automobiles in Mission Impossible 4- Ghost Protocol. They have also sponsored such events as

F1 in Europe, the America’s Cup in North America as well as numerous other sporting events.

BMW vs. the Competition

BMW is doing very well in the U.S. luxury market beating out top competitors such as

Audi and Mercedes Benz among all other luxury brands sold in America. In 2012 BMW sold

1.54 million vehicles compared to Audi with 1.4 million and Mercedes Benz with 1.3 million. In

2013 BMW sold 1.65 million vehicles again outselling Audi with 1.58 million and Mercedes

Benz with 1.46 million. Also in 2014 BMW was again the top selling luxury brand selling 1.8

million units compared to Audi at 1.74 million units and Mercedes Benz with 1.65 million units

(Doren, 2014). While all three companies sales have increased year after year BMW continues to

remain the number one selling luxury brand, even with average retail prices slightly higher than

their competitors.

BMW’s revenue for 2014 was a little over 80 billion Euros which is equal to

$90,800,000,000.00. This places them as the fifth largest automobile brand in the world behind

Volkswagon, Toyota, General Motors and Ford (Murphy, 2015). This is an impressive position

globally considering the competition produce economically more affordable vehicles and

includes many subsidiary auto companies such as General Motors with Chevrolet, Buick and

Cadillac.

BMW’s stock is currently around $ 89, a little down from a high of almost $120 back in

March of 2015, but still ten dollars higher than a year ago. Daimler AG the parent company of

Mercedes Benz stocks are currently at $ 79, ten dollars less than BMW’s stocks are currently.

The larger auto companies by revenue stocks are a little higher with Toyota at $ 122 and

Volkswagen at $ 108. On the other hand Fords stocks are only at $ 15 and GM’s at only $ 33.

Customization

The “Dream it, Build it” program is sustainable long term but there will be short term

economic downturns where that model of custom building luxury cars will not be popular nor

profitable. There are so many automobile manufacturers out there that most consumers can find a

car that suits their needs without having to get it customized. There are a number of luxury

brands, but also each automobile manufacturer has their models that are more fuel efficient, safer

on the road, have cheaper parts for replacement as well as numerous other factors that are

concerns to certain vehicle purchasers.

Only 15 percent of the 242,000 BMW’s sold in America in 2009 were custom made, as

opposed to approximately 50 percent of European BMW consumers who had their vehicles

customized. BMW’s plan is to increase that number to 40 percent by 2015. The desire for

customization here in the United States is still not as popular to sustain the program long term,

especially through highs and lows in the economy.

To improve the program they will need to make it more economically viable for their

consumers to purchase those customizations. Their vehicles on average are already more costly

to purchase than their competition in the luxury market, so those consumers who wish to

purchase luxury on a budget may opt for their competition such as Audi, Mercedes, Lexus,

Acura, Infinity and other luxury brands with lower sticker prices. The X3 already has a MSRP of

$ 37,000 plus, compare that to the Acura RDX with a ticket price of only $ 32,000. By reducing

the base price of their models they may be able to attract those customers on tighter budgets.

Custom Customers

There is a niche market for customizable automobiles, but I would imagine that is a very

small group and certainly even smaller when it comes to luxury brand automobile manufacturers.

The larger portion of this group is people without the money to afford a custom luxury car who

will build their own muscle, and racing vehicles themselves. There is a small group of customers

out there with the disposable income and want for a customized luxury vehicle. This is a way for

them to build a car that suits their individual tastes and desires. Unlike the larger portion of

consumers who desire a customized vehicle, they for the most part lack the time, and/or the skills

or ability to customize their own vehicles themselves.

I believe the average customer does not care for the “millions of combination” and all of

the options. Many are more than content with the lower retail price for the average vehicle, and

many opt to keep their old vehicles for longer periods of time. Automobiles such as Toyota,

Honda and Nissan tend to remain on the road much longer than the competition.

How it Relates to Our Book

This case study links to the book as far as strategic management and the company

mission of BMW. The case study shows how BMW’s strategic management and company

mission helped the company through two World Wars, and being in Germany there were many

sanctions put on them as a German motor company that could have very easily put them out of

business. BMW was able to persevere with their strategic management through those wars and

through the recent downturn in the economy.

References:

Boston, W., (2015) BMW Retains Title of World’s Top Luxury Car Brand. The Wall Street

Journal. Retrieved from http://www.wsj.com/articles/bmw-retains-title-of-worlds-top-

luxury-car-brand-1429022230

BMW Group, (2014) Another Record Year for BMW Group in 2014. BMW Group Corporate

News. Retrieved from

http://www.bmwgroup.com/e/0_0_www_bmwgroup_com/investor_relations/

corporate_news/news/2015/dividendenmeldung_maerz_2015.html

Doren, S., (2014). Record Sales for Luxury Brands in 2013. Luxury Society. Retrieved from

http://luxurysociety.com/articles/2014/01/record-sales-for-luxury-car-brands-in-2013

Murphy, A. (2015). The World’s Biggest Auto Companies. Forbes Magazine. Retrieved from

http://www.forbes.com/sites/andreamurphy/2015/05/06/2015-global-2000-the-worlds-

biggest-auto-companies/

Pearce, J. A., & Robinson, J. R. (2013). Strategic Management: Planning for Domestic

& Global Competition (13th ed.). New York, NY: McGraw Hill.