[pubert]

Just read this in the times business section and my gob nearly hit the floor,
what do you think? it's a bit long, so i've cropped out what isnt really relevant.

BMW is drawing up plans for a replacement mini that will be much cheaper to build. The new car will not be launched for three to four years, but car industry sources said BMW had already decided that it would have a less ambitious specification.
(Then goes on to say will continue to build at Cowley)

The reborn mini, launched by BMW 3 years ago, has been a runaway success. Last year the company sold 176,000 of the cars, 22% up on the previous year. Production this year is expected to exceed 180,000, boosted by the launch of a convertible version.

But industry insiders said BMW had concluded that a combination of the cars ambitious specification and a deliberate decision to offer low basic prices had restricted its profitability.

(A bit of bumf on BMW not publishing seperate figures for business) Deutsche bank estimates that mini made $61.5m (£33.5m) last year on a turnover of $3.4 billion.

It is understood that BMW is now intent on making the next mini significantly cheaper to produce by offering a more basic specification, and by cheaper sourcing of components.

The new mini will also be offered in a greater range of body types including a five door estate harking back to the famous mini traveller.

BMW said last night that it was studying a range of options for the new car. The company is also understood to be weighing additional investment at the Cowley plant, which is already operating flat out, Its production is limited by the capacity of its painting operation.

Dr Helmut Panke, BMW's cheif executive, recently told the Sunday Times that he considered Britain the "Spiritual home" of mini production, and stressed that the company had room to expand its operations at Cowley if it needed to boost production.




So, is quality and finish to suffer to make BMW more profit? and "A less ambitious specification" just how much less ambitious! the basic car does'nt come with much as it is. "Cheaper parts", does that mean it will rattle more, or will it just mean we'll loose that nice solid clunk as we shut the door on what is probably our second most expensive purchase.

I'm not even going to go in to the new body shapes.

Personally, i'll be a tad cheesed off if they reduce the build quality, thats one of the reasons i went for the mini, i like that solid clunk when i shut the door. To be honest i'd rather pay more for the car and keep the quality than pay less and get a cheaper quality car. It's god damned greed.

Cheers
Pubert

[Jonnyspin]

Please don't let Bangle near the Mini!

[Johnny225]

What?? That's very un-BMW like! I don't believe they'll actually do that, not with the current sales of the MINI being so high.
MINI traveller, what's next MINI SUV?

[rentagas]

Did you notice they illustrated the article with a picture of a mini convertible-but it was one of the early aftermarket conversions-not the new model.
I suspect BMW will wait and see. i strongly suspect that the 1 series will be the usual Bangle failure and BMW will chnage their view on their FWD baby car.

[minisoopercooper]

I was talking to someone who works at the MINI factory last week and they did say the car is being redesigned for 2006. It will look pretty much the same but every panel will be different. Apparently the way the car is designed is very complicated and therefore costly to build.

They are hoping to simplify the production and make savings that way. I agree that it would be very UNLIKE BMW to offer less spec than they do currently as this is one of the features that makes the MINI so different and therefore desireable to any other small car in the market.

I hope this article is just newspaper hype and mis quotes like 90 % of all newspapers.

If they cheapen the brand sales will rise initially as all the people who cant afford one now will be able to. But in the long run I think they will drop off because exisiting customers (i.e. US!) will not accept lower standards and will be tempted to go elsewhere or stick with the models we have rather than upgrade to the new cheaper version.

BMW beware!

Paul

[pubert]

Quote: Originally Posted by Johnny225

What?? That's very un-BMW like! I don't believe they'll actually do that, not with the current sales of the MINI being so high.
MINI traveller, what's next MINI SUV?

I know what your saying johnny, but like any business, if they can find a way of squeezing out more profit they'll do it, they'd be fools not to, make the car cheaper to build, lower the spec slightly and lower the price slightly and bingo you widen your profit margin, who knows what they'll do, especially with the convertible now in production to bolster up sales.

pubert

[wayche]

I don't know that I'd panic too much about the idea that they want to make the next generation cheaper to build: it's no secret that all companies want to find ways to increase their profit margin on their products, and if they can find a way to sell the same quality product faster and with less overhead, they'll do it.

But I don't think "less costly to build" necessarily equals "lower quality". Quality, in automotive terms, is still very much a function of great design and careful assembly.

[dinger]

Quote: Originally Posted by rentagas

i strongly suspect that the 1 series will be the usual Bangle failure and BMW will chnage their view on their FWD baby car.

I reckon were all in for a BIG surprise with the series 1.

[dinger]

Quote: Originally Posted by minisoopercooper

If they cheapen the brand sales will rise initially as all the people who cant afford one now will be able to.

Its not an expensive brand now..............unless you start speccing.


dinger.
Who cant afford a Cabrio now,but will be able too soon.

[pubert]

Quote: Originally Posted by wayche

I don't know that I'd panic too much about the idea that they want to make the next generation cheaper to build: it's no secret that all companies want to find ways to increase their profit margin on their products, and if they can find a way to sell the same quality product faster and with less overhead, they'll do it.

But I don't think "less costly to build" necessarily equals "lower quality". Quality, in automotive terms, is still very much a function of great design and careful assembly.

Yep, but my main concern is not the cheaper to build bit, you can build cars cheaper by using better technology, the part i'm concerned with is the "sourcing of cheaper parts",
theres no getting away from what cheap parts mean.

You can build a quality car more cost effectively (cheaper), but i dont think you can build a quality car with cheap parts.

pubert

[Wobert]

It depends how you quantify "cheap" parts......

Parts that have a high input of man-labour to manufacture, can be made at a lower cost by manufacturing them in a low-cost base ecomony.

This means moving the production of these components to places such as Eastern Europe (Czech Republic is a favourite), India and China.

BMW doesn't do this itself, it pushes it's Tier 1 suppliers to do it by aggressive cost estimates, that mean that by NOT doing it, the supplier could potentially lose the business.

Please do not confuse these lower cost economies with sub-standard parts.....as in a lot of cases, it is the Tier 1 suppliers that are setting up sister-plants, that are just using the lower cost labour rates to drive the cost down.

I know for a fact that companies like Timken, INA (taper & roller bearings) etc are producing same parts at a lower cost, in the places mentioned above. By doing so, they are able to offer the manufacturers the cost reduction that they want, without reducing their margin.

The company I used to work for, that makes big yellow diggers in the UK, were actively resourcing components into the lower cost base economies for exactly these reasons.......QED

These parts still had to meet the testing required of them, any failure would result in potential rejection of that supplier or source......


Robert

[eddie_DV52_CCZ]

Well they want to up productivity so that it becomes cheaper to build. fair enough cant complain. They can do this by either changine design or new technology. seems to me that they want to speed up production, this probably came from teh fact there is huge demand.

I dont think they will reduce the quality, its probably there selling point.

and as for cutting speccification list, what a load of BS. There main USP is that you can make your mini standand out, and there could be 100,000 different mini's...

[GasseyRob]

It appears that the strategy of "downgrading" has already had an impact at Mercedes, and they are now playing "catch-up" to try and regain quality. There was a press report (Car Magazine I believe) just after the release of the MINI predicting the second generation cars would be built down to a price rather than up to a specification.
Sony do this all the time. The first of a new product line is an engineering exercise the subsequent models are cost limited.
But.... get it wrong and all your hard earned reputation is more costly to buy back than the profits you made!!

[pubert]

Quote: Originally Posted by eddie_DV52_CCZ

Well they want to up productivity so that it becomes cheaper to build. fair enough cant complain. They can do this by either changine design or new technology. seems to me that they want to speed up production, this probably came from teh fact there is huge demand.

I dont think they will reduce the quality, its probably there selling point.

and as for cutting speccification list, what a load of BS. There main USP is that you can make your mini standand out, and there could be 100,000 different mini's...

Hi eddie,

I dont think they're on about cutting the spec list down, i think they may just make the basic car even more basic, which would mean more items on the options list. we'll have to wait and see. If that's the case, i would love to know what the price difference will be between the basic car as it stands now is, and what this same car will cost in 3-4 years time when you have to spec up to todays standard.

pubert

[pubert]

Quote: Originally Posted by GasseyRob

But.... get it wrong and all your hard earned reputation is more costly to buy back than the profits you made!!

You got that right, i really do hope this cost cutting exercise works for BMW, i would hate to see the reputation of the mini shattered by trying to save a few £ here and there.

pubert

[Irlmin]

I think 'cost cutting' may have started already ,have a close look at the 'facelift' headlights and interior roof lights .
Gerard

[johnsocal]

BMW is having the problems I suspected they would have. While the Mini has been a sales success and dealers are most likely some money on them BMW HQ's is not. I dont think BMW can justify loosing money on the Mini Brand hoping Mini owners will migrate up to a BMW 1 series (or higher) when it comes times for them to purchase a new car. While I love the Mini I never have nor will Iever buy a BMW because I find them to be the most pretentious brand out here in Southern Califronia.

BMW can move the Mini brand more upscale and push the price of the base Mini near $25,000 and the Cooper S near $30,000 but then it would start to intrude on the BMW-brand territory which starts to defeat the whole concept and philosophy of the Mini brand. I would suspect the BMW will outsource considerable more parts from Korea and China and much of stylish-details (that we take for granted) will become add-ons.

Considering the new Euro pedestrian laws (forcing the Mini's front to be higher or forcing the Mini's to have some-sort of expenisive Hydraulic hood) will be coming soon in conjuction with an all-new US side-impact law that will force the Mini's side panel (doors and etc) to become thicker and heavier within the next few years.

BMW has no choice but to find ways to cut cost or be forced to raise prices considerably and make the Mini nothing more then a rebadged BMW 1 series.

[~Marcus~]

I have a feeling the next generation MINI would be built down to a price more - after all the current MINI despite all the money they get from options is quite an expensive piece of engineering. My concern is how cost cutting is going to affect the MINI's appearance. Items like the one piece bonnet, laser-cut rear lights and all the bespoke parts the interior uses which is not shared with any other model do not come cheap!

BMW are excellent at managing brands however it seems likely the MINI will become less of a stand-alone fun car and more BMW's small car brand to take on Smart. A MINI-MPV or even an SUV/4&4 are probably being considered which is to the detriment of the MINI's unique sporty character. I hope BMW can expand the brand while still giving us existing MINI owners the unique, sporty, quality experience we expect - it's going to be tough for them.

[johnsocal]

Sometimes I think it would cheaper for BMW to use BMW 1 series chassis and components on the next-gen Mini (especially for the US market) then it would be for them to make a all-new chassis specifcally for the next-gen mini.

Unfortunately a 1-series-based Mini would no longer be a Mini but it would be more like a "Medium", but on the other hand many oldschool Mini purest probably think the samething of the new Mini, right?

There has been talk the BMW will only bring the 1-series coupe/convertible to the US which in my opinion would leave room for MINI to have exclusivity of a 1-series based hatchback/convertible and 5 door wagon.

[stryder]

With how poor the 3 series hatchbacks sold in the US and how well MINIs sell, BMW isn't going to attempt another 318ti type car. There's an obvious reason BMW only sells 6 cylinder 3 series' over here, and its because no one wants anything else. With that in mind, and because MINI is a 'premium' car over here (its the size of a Chevy Aveo if not smaller (Daewoo built in Korea) but costs 2X as much) they really can't suddenly make it an economy car, because no one wants that.

I think its really as others have said 'cost cutting' and not making the car cheaper, its just making it more profitable. We are the ones who get the vote with our wallets, so we get to say what should be included and if they start removing things, we'll see. There is that almost no option Cooper in Canada, that I'm sure is somewhat a test of if people really want to buy lower priced MINIs, I really don't think they do at least on this side of the pond. Part of the logic of an Automatic in the S is because there's probably a large portion of the MC CVT sales that could easily become an Auto S for $3-4K more. There's demand for more expensive cars and gadgets, but it makes sense BMW wants to increase their profit margin by driving costs down, that's the only way to do it, short of raising prices for the same thing, which wouldn't work either.