Bob Lutz chimes in on the Automotive Enthusiasts vs. BMW debate

[lilmacarony]

Originally Posted by ZilberGrau ZHP

And yes mainstream is the word. In going from an E46 ZHP to a 435 GC is night and day. I own both and drive both. The 435 is UUUGe and is NOT for carving up side roads and mountain passes- but it is a great highway cruiser for sure- and with the front splitter does add some good traction in the 80-100 MPH Range (not diving in that range much but...) but so are MANY other cars out now who all share the same robotic assembly plants and have pilfered top designers away from the German companies etc...
But where BMW MUST change is the Navigation Infotainment system- the roller ball concept is weak and takes to many steps. The nav system doesn't recognize voice commands for Sh*t. I like the split screen for traffic alerts but its not near as good as my Iphone...
My daughters Ram pickup with the 8" touchscreen option blows the BMW away. And for 65k why did I get such an AVERAGE sound system- the Kia Rios (and many others in the 18-30k range) are just so much better. BMW gets a lot for that logo and that is not a bad thing. The cars for the most part are great- but next time around- how I interact with it the car will be as important as the car itself.

Sounds like you need someone to teach you how the Nav system works.

[evanevery]

Originally Posted by sygazelle

RE Your Chart: "What Market Segment would you Emphasize in your Product Strategy"

That's a pretty simplistic viewpoint. Lets try it from a little less simplistic business perspective:

Would you rather have:

1. 100% of 5% of the total Market

or

2. 5% (or less) of 95% of the Total Market

Owning ALL of a small niche is often better from a business perspective than owning very small piece of a large market. Ask me how I know this... ;-)

[cwhands]

[QUOTE=evanevery;20316887]

Originally Posted by sygazelle

RE Your Chart: "What Market Segment would you Emphasize in your Product Strategy"

/QUOTE]


That's a pretty simplistic viewpoint. Lets try it from a little less simplistic business perspective:

Would you rather have:

1. 100% of 5% of the total Market

or

2. 5% (or less) of 95% of the Total Market

Owning ALL of a small niche is often better from a business perspective than owning very small piece of a large market. Ask me how I know this... ;-)

How would a company like BMW take 100% of that niche? They can't. That's why they (and most other large companies) prefer option 2.

[evanevery]

[QUOTE=cwhands;20316908]

Originally Posted by evanevery

How would a company like BMW take 100% of that niche? They can't. That's why they (and most other large companies) prefer option 2.

You miss the point... The point is, that its not as simple as declaring one market larger than the other. Its how much of either market you can acquire which determines your share...

There are simply more players to compete with in the mass market. There are far fewer players in the performance market (and its getting smaller)...

[sygazelle]

Originally Posted by stefan

Probably a good thing you aren't in BD as if that is the way you think, you're missing a major opportunity.

See that blue line? Those are the guys who will pay for the high margin product if you make it true-to-form and speak directly to the enthusiast. See, you use all that orange to fund the business and make profit (Cayenne). But then you market something exquisite to those who appreciate it (911R) not some half-assed fuel efficient shit (any turbo M).

Sorry I wasn't more clear. They absolutely should care about selling cars to the little blue group. They do that by selling M's and highly optioned non-M's. If you think these products aren't worthy and they have abandoned the enthusiast altogether I really don't have an answer for you other than disagreeing. If there are enthusiasts out there who think M2, M3, M4 etc aren't good enough then stick with older gen BMWs or move on. Question is: Where to they go to get a better car in the BMW price range.

What BMW doesn't do, and the main point of my post that I was not clear about, is let the little blue group dictate their overall product strategy. What they don't do is come here to the F30 forum, read the posts about them losing their way, and decide to abandon their product strategy for less sporty products to attract a broader market. I can't believe its taken them this long to get to FWD. Next will be a pickup truck.

[tetsuo111]

Fascinating to observe the responders self-segregate into those who defend mediocrity in the pursuit of growth and profit, and those who advocate being excellent in a specific (but narrow) market segment.

Either strategy can succeed. Consumers ultimately choose which companies they support with their patronage.

[Achappell8]

If we use the stock market portfolio example -just because you happen to know a lot about a particular industry (let's say cars), you wouldn't limit your investments to cars. You would likely still diversify no?

What is the difference for a car manufacturer diversifies across market segments to insulate them from potential risks (I.e. Economic downturn). Plenty of niche car manufacturers have gone the way of the dodo by not diversifying enough.

Across the industry, you see this happening more and more with other large volume "niche" brands (see Porsche, Lambo, Bentley, etc.)

I say if you have to sell a few small cars to China and India to keep products like the M2 and M3 coming - so be it.

[ZilberGrau ZHP]

Originally Posted by lilmacarony

Sounds like you need someone to teach you how the Nav system works.

Oh no I know how it works- it just sucks

[evanevery]

Originally Posted by sygazelle

What BMW doesn't do, and the main point of my post that I was not clear about, is let the little blue group dictate their overall product strategy. What they don't do is come here to the F30 forum, read the posts about them losing their way, and decide to abandon their product strategy for less sporty products to attract a broader market.

So the question becomes: Is BMW a company that ultimately takes performance car designs and make mass market cars from them? ...or do they end up taking mass market car designs and make performance cars from those?

There is a big difference. What you start with matters...

...and I have nothing against BMW expanding their market - as long as they don't lose their way. All the BMW cars I've owned have been M cars - and that includes an X6M. So yeah - I've bought a BMW SUV (albeit an M variant).

The danger is too much brand dissolution to the point where they simply no longer have the resources or inclination to design true performance vehicles...

[Pparana]

Originally Posted by evanevery

So the question becomes: Is BMW a company that ultimately takes performance car designs and make mass market cars from them? ...or do they end up taking mass market car designs and make performance cars from those?

There is a big difference. What you start with matters...

...and I have nothing against BMW expanding their market - as long as they don't lose their way. All the BMW cars I've owned have been M cars - and that includes an X6M. So yeah - I've bought a BMW SUV (albeit an M variant).

The danger is too much brand dissolution to the point where they simply no longer have the resources or inclination to design true performance vehicles...

well that's pretty obvious, the f30 came before the f80, the f22 before the f27, and so on.

More and more BMW is not building bespoke model lines for the m cars. Does it matter, nope they sell pretty much all they can make.

BMW builds over a million cars a year, sorry they all can not be "performance cars". They build what people buy. Bob summed it up perfect. No point to try and add anything.

[HighlandPete]

Originally Posted by evanevery

So the question becomes: Is BMW a company that ultimately takes performance car designs and make mass market cars from them? ...or do they end up taking mass market car designs and make performance cars from those?

There is a big difference. What you start with matters...

...and I have nothing against BMW expanding their market - as long as they don't lose their way. All the BMW cars I've owned have been M cars - and that includes an X6M. So yeah - I've bought a BMW SUV (albeit an M variant).

The danger is too much brand dissolution to the point where they simply no longer have the resources or inclination to design true performance vehicles...

I suppose one big question is, will there be a decent market (or just a very small one) for high performance cars in the future?

With all the pressures over here in Europe for low and zero emission cars, are the days numbered anyway?

BMW, like the other manufacturers have to meet emission targets, small insignificant models to the enthusiast, (e.g. 3-cylinder engines) will be where the volume and money is made, whether we like it or not.

M-cars are not even on a lot of 'enthusiast' radars anymore, we've already had to cut the cloth for cheaper motoring. It's a key reason why the high performance diesel has become the car of choice from the BMW range. The cry went out when BMW started developing and fitting diesel engines, they knew what they were doing. I drive a 535i, a rare car in the UK, most 5-series are 520d models. Same as most 3-series are 320d, even if M-sport trim levels. If BMW didn't make these basic models, many would have to abandon BMW and go elsewhere to get a small diesel.

[KevinGS]

Originally Posted by tetsuo111

Fascinating to observe the responders self-segregate into those who defend mediocrity in the pursuit of growth and profit, and those who advocate being excellent in a specific (but narrow) market segment.

Either strategy can succeed. Consumers ultimately choose which companies they support with their patronage.

Both can succeed.

But the bean counters at car companies prefer having a broader selection of good cars producing consistent profit than a few incredible and special cars producing massive profit.

It's all about managing risk.

BMWs are still selling well to the masses, so BMW is pretty fat and happy. And they'll throw us hardcore enthusiasts an M car to pacify us, and maybe an M4 GTS to show what they can do.

And lo and behold, after all of our complaining, the M4 GTS are flying off the shelf too.

So, the bean counters are extremely happy....which means nothing's really going to change. We keep buying their cars....

[conradb]

BMW is free to build what they want, and I'm free to buy what I want. I left BMW a year ago now. I bought a C5 Z06 Corvette and made it into an insane track car. It can post numbers that rival out the M4 GTS. It cost me about 1/4 the price too. I went and bought a nice Ford Expedition to tow it to and from track day too.

If I'm going to buy a DD Bimmer again, it's probably going to be a used F10 535i end of next year. Why pay so much for cars that don't offer much beyond some luxury and depreciate like crazy?

[bd307]

Originally Posted by HighlandPete

I suppose one big question is, will there be a decent market (or just a very small one) for high performance cars in the future?

With all the pressures over here in Europe for low and zero emission cars, are the days numbered anyway?

BMW, like the other manufacturers have to meet emission targets, small insignificant models to the enthusiast, (e.g. 3-cylinder engines) will be where the volume and money is made, whether we like it or not.

I do not believe there will be a company who can be successful (profitable) selling high performance cars only because majority of the population changed the way they shop for products. Just think about it. You and I would want to spend as little money as possible but at the same time receive as many features as possible. Our cars are a good example.

Look at how Lotus failed. They make great high performance cars, but what happened?

Companies are the same. They cannot offer a product that has a sole purpose only.

As I am typing, I am struggling to name a product that was released in the last 10 years that would serve 1 purpose only.

[DrivenByE30]

I like how the question to Lutz came from Cuba...


I thought Cuba was locked out and cut from the rest of the world until last year?

How is the person able to ask such pertinent question so fast?

Cuba has already caught up to First World problem$?!?

[gthal]

Originally Posted by stefan

Porsche.

yes they built the Cayenne... but have you noticed that they have remained 100% true to their core fan base? Even going as far as to create the 911R?

When BMW M build the S65 they had said there is "plenty" of room left in NA development. Had BMW cared about its core fan base it would have continued down that glorious path and continued building legendary cars.

Originally Posted by stefan

Probably a good thing you aren't in BD as if that is the way you think, you're missing a major opportunity.

See that blue line? Those are the guys who will pay for the high margin product if you make it true-to-form and speak directly to the enthusiast. See, you use all that orange to fund the business and make profit (Cayenne). But then you market something exquisite to those who appreciate it (911R) not some half-assed fuel efficient shit (any turbo M).

I completely agree about the S65 having owned one as well. Made the car feel like an absolute boat at low speeds given the E92's enormous (too big) size and the total unwillingness of the motor to do anything until you're up in high revs breaking every speed limit. As for the M2 its..better.. I guess. But still misses the mark IMO. I might consider one CPO as a DD.

I hear you but I think you are over simplifying.

Porsche can charge a real premium on their cars and sell them to very elite buyers. Porsche, Ferrari, Aston Martin and a few others enjoy a special place in the pocket books of the worlds most affluential people.

To those folks, BMW is a really nice entry level luxury brand but BMW can't command the same pricing on M cars that Porsche can. For example, the BMW market is very small relative to someone willing to shell out $150,000 for an M4 GTS. Yes, they sold it out but that's because it is super low volume. If they made as many M4 GTS as Porsche makes 911 GTS's, there would be a lot sitting around waiting to sell. BMW could build that image for M cars (similar to Porsche) but it would be a difficult and expensive process... likely not worth the investment.

Sure there is higher margin in M cars but you have no idea what the spread is versus high volume 3 series cars. My guess is BMW have a lot of very intelligent, very informed marketing, business development and finance people on payroll. Far more knowledgeable than us and with better REAL data than our speculation. Their sole role is to determine markets and assess profitability.

I can pretty much guarantee that they have looked at their ability to make money in lower volume specialty cars vs. higher volume, entry level luxury cars. The result of that is what you see in cars being built. They build what is profitable and what will sell in volume... and make the most money.

Sure, their strategy could prove wrong but I'd bet money on them and not us. As that pie graph showed, those on this forum are insignificant in the market regardless as to how much as we feel we are really important

[sygazelle]

Originally Posted by gthal

I hear you but I think you are over simplifying.

Porsche can charge a real premium on their cars and sell them to very elite buyers. Porsche, Ferrari, Aston Martin and a few others enjoy a special place in the pocket books of the worlds most affluential people.

To those folks, BMW is a really nice entry level luxury brand but BMW can't command the same pricing on M cars that Porsche can. For example, the BMW market is very small relative to someone willing to shell out $150,000 for an M4 GTS. Yes, they sold it out but that's because it is super low volume. If they made as many M4 GTS as Porsche makes 911 GTS's, there would be a lot sitting around waiting to sell. BMW could build that image for M cars (similar to Porsche) but it would be a difficult and expensive process... likely not worth the investment.

Sure there is higher margin in M cars but you have no idea what the spread is versus high volume 3 series cars. My guess is BMW have a lot of very intelligent, very informed marketing, business development and finance people on payroll. Far more knowledgeable than us and with better REAL data than our speculation. Their sole role is to determine markets and assess profitability.

I can pretty much guarantee that they have looked at their ability to make money in lower volume specialty cars vs. higher volume, entry level luxury cars. The result of that is what you see in cars being built. They build what is profitable and what will sell in volume... and make the most money.

Sure, their strategy could prove wrong but I'd bet money on them and not us. As that pie graph showed, those on this forum are insignificant in the market regardless as to how much as we feel we are really important

^^^^
This

[raysspl]

Not much of a fan of Lutz due to his stodgy & unimaginative approach (relatively) in the automotive industry

[cwhands]

[QUOTE=evanevery;20316946]

Originally Posted by cwhands

You miss the point... The point is, that its not as simple as declaring one market larger than the other. Its how much of either market you can acquire which determines your share...

There are simply more players to compete with in the mass market. There are far fewer players in the performance market (and its getting smaller)...

I see your point. and...

It's only going to keep getting smaller.

[Chihuahua]

I've never understood why people think the current 'watering down' of BMW is necessary to make a profit. Other than the brief periods during the Quandt takeover and the Rover debacle, were they not profitable? This current state of BMW isn't driven by the need to profit, it is driven by greed.

[insanecoder]

Originally Posted by Kyle B

I've never understood why people think the current 'watering down' of BMW is necessary to make a profit. Other than the brief periods during the Quandt takeover and the Rover debacle, were they not profitable? This current state of BMW isn't driven by the need to profit, it is driven by greed.

Greed for profits
The watering down is the movement of the models to attributes which better entice buyers from the mass markets.. these people are often looking just for the BMW shield and the looks w/ a nice comfy ride soft suspension.
If theres a market to be squeezed then they will market products into that market.. slightly sub-par BMWs for soccer moms and grandmas who have $$$ and dont know the difference except for a BMW shield on their car.
Problem is the watering down is spreading to some of the the performance cars slowly.. still if you configure the cars correctly then you still can navigate the maze of slightly subpar products and end up with a true BMW of yore.
Theyre just stretching their arms to try and cover the market to make more money.. more and more

[The Choosey begger]

Lutz is up there with Peter Schutz the American President and CEO of Posche in the early 80's that saved the 911.

http://www.roadandtrack.com/car-cult...ries-the-suit/