[Voltigeur]

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Reading this note today, no huge revelations:

* euro cars are profitable in relation to weight/size (Detroit anyone?)
* euro cars are profitable in relation to their engines

Whaaa? What happened to the rest of my post? Charts and comments are GONE?!

OK, sans my comments on implications, the charts redux:

(1) 3er and 5er make up the majority of BMW's profits; and high margin 7ers's, 6ers's etc - Mini and 1er's are not that profitable:



(2) M3 is vastly more profitable than the rest - engine displacement is a key variable in respect of margin:

[guarnibl]

I kind of figured this was the case given the ridiculous markdowns on the M

Good to hear though... but damn -- I would have figured that the 1 series would have been more profitable for them.

Where can we find additional line estimates?

[pmeloche]

Originally Posted by guarnibl

I would have figured that the 1 series would have been more profitable for them.

The price for a 1 Series is so low compared to a 3 Series (especially the M3) that BMW cannot possibly tack a huge margin of profit on it. You would look at selling a huge # of units in order to get a profit comparable to the 3 Series.

[Voltigeur]

Originally Posted by guarnibl

I kind of figured this was the case given the ridiculous markdowns on the M

Good to hear though... but damn -- I would have figured that the 1 series would have been more profitable for them.

Where can we find additional line estimates?

Re 1er: I think mgmt decided to fill a niche (Cayenne! ) - as in the case of the Mini - it's more turf war than margin. Same goes for Merc A- & B-classes.

The key point is that most of the volume does not make any or much margin (also true in Detroit). So the Europeans need to sell high-margin products like the M3, 6er, 7er, X5, X6 to make the firm truly profitable on an EBIT basis.

By "line estimates" do you mean the margins by series? (ie 5er, 7er etc) BMW AG does not release those data and in the above data on the 3er was reverse engineered by some good analysts.

[guarnibl]

Originally Posted by Voltigeur

Re 1er: By "line estimates" do you mean the margins by series? (ie 5er, 7er etc) BMW AG does not release those data and in the above data on the 3er was reverse engineered by some good analysts.

Yeah -- I didn't read that bottom label in small text until after I made the post. I guess the 1 series thing makes sense -- prices are low, but build quality is still high -- parts are still as expensive... so not much room for profit. However, it would cut overhead as indicated above.

I have no plans to stop buying BMWs though -- they've been more rock solid than anything I've ever owned. I've got the M3 until '11 -- will probably go the buyout option on it when the lease is up, or pick up something else like the M6 (unless they have a super car out).

You know... I really do wish BMW made an M with AWD. When my gf's (will be married by '11) Saturn lease is up, we'll need another practical car that's good in the weather. BMW doesn't really give you any options, unfortunately -- for performance and snow in the M lineup. Might have to go with a 335xi -- though I guess I might have to force myself to pick up an Audi RS4.

[Voltigeur]

Originally Posted by guarnibl

You know... I really do wish BMW made an M with AWD. When my gf's (will be married by '11) Saturn lease is up, we'll need another practical car that's good in the weather. BMW doesn't really give you any options, unfortunately -- for performance and snow in the M lineup. Might have to go with a 335xi -- though I guess I might have to force myself to pick up an Audi RS4.

This is likely heresy but in Canada a mate of mine has an RS4 and snow tires and there's no going back. The 4WD is a precise climate match. Then the RS5 cometh ... or used Godzilla.

But I'm a Bimmerphile and not up north so an M-car fits the bill. But one should never be blind to the comp.