- The Washington Times - Friday, April 20, 2001

It looks as if BMW's got its groove back.
Only 24 months ago, things looked bleak for the Bavarian automaker. Saddled with heavy losses from its Rover Group operations and distracted by squabbling in the top ranks over what to do about it, BMW erupted into a nasty bloodletting that saw several top executives issued their walking papers.
A fire sale followed a year later, as Rover car operations were peddled to investment firm Phoenix Consortium for a meager $16 million and Land Rover signed over to Ford Motor Co. for $3 billion.
The moves made it clear BMW's controlling shareholders, the Quandt family, were losing patience, and new rumors were spawned that BMW would be sold. Since then, the maker of the "ultimate driving machine" has rediscovered its roots. Having abandoned Rover, and with it the distraction of selling high-volume, low-margin cars, BMW now has its full attention back on what it does best performance machines.
The results have been dramatic. BMW Group sales rose to a record $33 billion in 2000, and BMW-brand revenues jumped a whopping 20.5 percent.
And the new model game plan which includes the upcoming, highly publicized Mini, a new entry BMW calls the 1-series and a couple of new crossovers, plus a Rolls-Royce to fill out the top end holds far more promise than the one circa 1998, when BMW appeared tragically bent on becoming a full-line car producer.
"Volume as an end in itself is not the objective," Chairman Joachim Milberg now says. "Rather, what we want is profitable growth, with 'profitable' coming first and 'growth' following second. What matters is strength, rather than sheer size."
The risk is that the automaker goes too far down market on its own, tarnishing the highly respected BMW brand. That fear is what prompted BMW to buy Rover in the first place. But top executives no longer see it that way.
"I honestly don't see the dangers," said Helmut Panke, management board member. "There is room in the market for a [lower-priced BMW]."
The move into the pricing stratosphere with Rolls-Royce, a brand BMW will acquire from Volkswagen in 2003, also represents new territory. But again, Mr. Panke said BMW is up to the task.
"A lot of customers said they wanted more luxury out of a BMW car," he said. "We can answer those needs with Rolls and keep the BMW brand focused."
The rapid turnaround has paid off in spades for investors. In the past year, BMW shares gained 15 percent. And higher profits are promised for 2001.
All that is making the Quandt family happy again and quieting speculation BMW needs a partner to survive.
"If you look at the margins, we are No. 2 in the world per car in profits," Mr. Panke said. "So there's no real reason to sell.
"And in talking to the [Quandt] family members myself, they will not consider any upcoming proposal there." The competition won't be happy to hear it.
WARD'S AUTOMOTIVE INTERNATIONAL

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