BMW in America and Beyond
Bayerische Motoren Werke AG, or Bavarian Motor Works, known to the common man as BMW, is a German automobile company. The company was started in 1916, and manufactures automobiles, motorcycles and engines. In its bid to go global, BMW opened a manufacturing facility in Greer, South Carolina: the BMW US Manufacturing Company, in 1992. In addition to the South Carolina manufacturing facility, BMW's North American companies also sell, design, market and handle financial service operations in the US, Canada and Mexico.
The Spartanburg factory in Greer employs about 7000 people, which is a combination of both BMW and contract workers. It has been manufacturing the BMW X5 series, and more recently, the production of the X6 series as well. The smaller BMW X3 is also manufactured here, along with the BMWs featuring the VIN numbers beginning with "4US and 5US".
BMW vehicles are renowned for their excellent on-road performance. Despite producing one of the best performing vehicles, it faces tough competition from other luxury car makers like Mercedes Benz, Cadillac, Audi and Lexus. However, Lexus may be out of the race temporarily as there has been a drop in sales this year. However, competition from Mercedes is something BMW cannot take lightly. BMW CEO Jim O'Donell feels that Mercedes may be very aggressive this year, faced with dwindling opportunities in the future, owing to the varying models the firm had already put on the road.
Despite the competition, BMW US (BMW and MINI combined) had reported sales of 25,247 vehicles for April 2011. This is a 19.6% increase from the sales figures recorded for the same period in 2010. BMW also has a healthy work culture. It follows all the international regulations set up by the ILO (International Labor Organization). It complies with all the national regulations of the nations in which it has its branches with respect to work time, paid leave, and occupational safety.
As part of its future expansion plans, BMW plans to invest $ 750 million in the Spartanburg plant. This expansion will allow 240,000 vehicles to be produced a year, and will make this plant the largest in the US. The Spartanburg plant, BMW's first plant outside Europe, is the first step in the company's attempt at globalization. Also the cars manufactured in the US will not be as expensive as the BMWs made in Germany, which works to BMW's advantage in the US.
Though BMW produces world class vehicles renowned for their performance, it has to look for ways to combat the threats it faces in the US market. Some of the threats are competitive pricing and similar concepts being developed by other luxury car manufacturers, the economic slowdown, surging oil prices, new legislation, changing government policies, increase in the number of people working from home thereby reducing the demand for vehicles, etc. BMW has also had to make massive recalls in the last couple of years due to brake defects, problems encountered in the high pressure fuel pump, fuel sensor problem, etc in its vehicles.
Though the current situation in the market threatens the German automaker, BMW is not one to cringe. It is trying to find opportunities in adversities. Though it has had to engage in massive recalls, it is trying to fix the situation by extending the warranty on few vehicles to 10 years/120,000 miles.
-Will the massive recalls harm the company's reputation, thereby impacting the company's sales in the U.S?
-Will BMW be able to survive the aggressive competition from Mercedes Benz, and still show an increase in sales percentage in 2011?