Wait, Wait Don't Tell Me--A Tale of Future MINI Production?

2178 Views 17 Replies 13 Participants Last post by karmuze, May 28, 2002

karmuze

Discussion Starter · May 24, 2002

In a speech before dealers and automotive press late last year, the CEO of BMW NA (Scottish lad he are)explained BMW's secret for increasing sales even in a bad economy. He said that BMW is doing so well because its economies of scale are ideal. For a manufacturing plant, he said that a production of 250,000 cars per year is the sweet spot in the economy of scale equation. Below 250k the unit cost increases, and above 250k requires second sets of costly tooling and a new plant facility, that also increases unit cost. He then outlined BMW's five primary auto manufacturing plants and their current yearly output: Regensburg-250,000..Munich-250,000..Dingolfing-250,000..Spartenburg-100,000...Oxford-120,000. He then said that the last two plants could be expanded, in the future, to bring them up to scale.

Similarily, engine manufacturing sites need to build 400,000 units per year to reach the ideal economy of scale.
BMW engine plant's capacity (not yet reached):Hams Hall-400,000 4-cyls...Munich-300,000 6,8,12-cyls...Curitiba, Brazil-400,000 4-cyls.

From a Brazilian site I found that Tritec produced 80,000 engines in 2001 and plans to more that double that to 175,000 for 2002.

Comments? My observations: Oxford MINI Manufacturing and Tritec Motors both have capability to double with
just an incremental new capital investment. BMW would be derilect to their investors not to use that excess capacity when the demand is there. I don't think that Tritec engine will be replaced in the MINI any time soon, given the $500M investment, a brand new plant (2000) and the unused capacity. To counter my prediction, however, the General Manager of MINIUSA has said that US sales won't exceed 25k-30k per year to maintain Mini's exclusivity.

BTW, if anyone wants to view the entire speech(35+minutes), let me know and I'll search for the website again and post it.

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1 - 18 of 18 Posts

Sejanus

· #2 · May 24, 2002

The more MINIs the better! Seriously, though I don't think it should be an "exclusive" car. The original Mini was meant to be a people's car and while the BMW MINI may never be as accessible I don't like the idea of it being out of reach to people. I'm certainly frustrated by the existing wait and it does take some of the enjoyment off the car for me.

stanMINI

· #3 · May 24, 2002

If the MINI continues to maintain a high waiting list, then the re-sale value for those of us that do get them will stay high as well. That said, I think the initial demand will drop off and the wait lists will be reduced. This is probably BMW's thinking at the moment. If the demand continues to stay high, high enough to keep a two-three year waiting list I believe they will increase production. They would not want to leave that much money on the table. For all the people who would even get on a 3 year wait list there are probably 10 potential buyers who would just go elsewhere. IMHO.

Martin L

· #4 · May 24, 2002

In the Autocar article it mentioned that the UK will only have an allocation of 4000 Ss this year, so it will firm up residual values. I'm very happy with that in a selfish way as I've already got an alloctation

It is a very scary prospect if they do limit the production though, as surely they should share as much of the MINI that they can.

erazo

· #5 · May 24, 2002

I read in a business journal somewhere that a third shift was recently added at Oxford. More economical to add a shift than to outfit a new plant somewhere else.

I also read that the Tritec facility in Brazil faced an uncertain future in 2000 when DaimlerChrysler spurned the 1.6 for a 2.0l engine for the PT Cruisers. It was saved when the Euro PT Cruiser stayed with the 1.6 and BMW selected the engine for the MINI.

Clutch Cargo

· #6 · May 24, 2002

erazo said:
I also read that the Tritec facility in Brazil faced an uncertain future in 2000 when DaimlerChrysler spurned the 1.6 for a 2.0l engine for the PT Cruisers. It was saved when the Euro PT Cruiser stayed with the 1.6 and BMW selected the engine for the MINI.

?? My wife has a PT Cruiser, it's got a 2.4 liter engine. More than satisfactory for her needs. But in Europe the Cruiser uses the same engine as the MINI??

BruceK

· #7 · May 24, 2002

Clutch Cargo said:
?? My wife has a PT Cruiser, it's got a 2.4 liter engine. More than satisfactory for her needs. But in Europe the Cruiser uses the same engine as the MINI??

The only Tritec engine used in a Chrysler product (that I am aware of) is the 1.6 unit (similar to the MINI's) used in the Neon models sold in South Africa.

Does anyone else know of others?

erazo

· #8 · May 24, 2002

Clutch Cargo said:
?? My wife has a PT Cruiser, it's got a 2.4 liter engine. More than satisfactory for her needs. But in Europe the Cruiser uses the same engine as the MINI??

Yes, at least initially, it offered the 1.6 in the base model (not sure about 2002). Most Euro buyers are opting for the larger 2.0 or diesel, while North American buyers are going for the 2.4.

karmuze

Discussion Starter · #9 · May 24, 2002

Originally posted by Sejanus
I don't think it should be an "exclusive" car.

I agree. I believe that MINIUSA could double US sales to 40,000 per year and still not run into the market oversaturation problem, that the PT Cruiser and New Beetle did when they were selling 300,000 each per year.
All the dealers and the many people on the waiting lists were surely support that.

Originally posted by Martyn
All that is left to implement shiftwise, is a weekend day shift.

I think that the biggest gain in output would be the result of experience, process improvements, and pay or bonus incentives for the workers, rather than adding a large number of new people. insiderMINI reported (postid=23495) that the assembly line was designed for 40 cars per hour. That would achieve the 250k level; i.e. 40CARS x 20HR x 6DAYS x 50WKS = 240,000.

Originally posted by BruceK
Does anyone else know of others?

The 1.6ltr Neon is also sold in Germany and Spain as well. But the journalist there also pointed out that the 2.0ltr is only 608(C=)more in Europe, implying that the smaller engine would not be a big seller. Hey, and welcome back-any sign your S has been released from detention yet, after getting caught smoking?

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MINIjewel

· #10 · May 24, 2002

Sejanus said:
The more MINIs the better! Seriously, though I don't think it should be an "exclusive" car.

Except that MINI is trying to avoid flooding the market like "other" car manufacturers did. You all know who I mean.

RickB

· #11 · May 24, 2002

I hope the MINI doesn't go the way of the MR2 Spyder. It used to be, you had to go to three Toyota dealers to find one MR2, and wanted $5000 over list. Now, every Toyota dealer has three of them, and they still want $5000 over list.

BruceK

· #12 · May 24, 2002

karmuze said:
...Hey, and welcome back-any sign your S has been released from detention yet, after getting caught smoking?

Thanks! Well, it sat around the factory in Oxford for nearly 20 days before going to Southampton – supposedly getting final quality work done (or having xenon’s fitted). But now my Cooper S is currently enjoying a see cruise with a bunch of other MINIs on the good ship Jingu Maru (due to dock two days later than originally scheduled in NY – new date of 30 May). The Owner's Lounge says my car will be at Westchester MINI in NY by 4 June, but since I’m flying in to pick it up, I’m allowing some extra time just to be safe. Planning on making it mine on 10 June for the fun-run break-in (running in) trip back home to Texas.

rich

· #13 · May 24, 2002

Thinking about Karmuze's original point of more output from Cowley being a key priority for BMW bean-conters, IMO they will not achieve that with the current MINI range alone. The diesel version may add, say, 20% incremental sales if they're lucky, so I think BMW will add a new model range at some time in the couple of years. Probably a more practical mid-hatch leveraging the credibility built up around the current MINI

My predictions... 5-door, 4-cyl MINI-MPV with crisp handling and MOR performance, aimed at the style-conscious young family. Engines will be 1.6 Tritec petrol ex-Cooper & Toyota diesel. Pricing on a par with the Cooper or +10%. Name?... Tricky one... Maybe MINI Club (i.e. dropping the "man" for noughties PC-inclusiveness) which ties with a premium positioning, or MINI Max emphasising the space & softening the performance sacrifice

This should add true incremental sales giving BMW coverage of both the MINI 'me' buyer and the MINI 'us' buyer

If it's a hit, expect a MINI Cooper Club too

By then Cowley will be MAXed out

Who knows... I'm probably way off the mark

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karmuze

Discussion Starter · #14 · May 26, 2002

Originally posted by Martyn
Currently the production line is running at 32.4 cars per hour.

Thanks for the inside information, Martyn. At that rate they should be producing about 200,000 cars per year instead of the official number of 120,000 that was released by MINIUK back in Nov. I find that encouraging, as one who has been waiting 12 mos., and it is also remarkable that a start-up operation could double it's production rate in one short year. I wonder who gets the car that is missing 60% of its parts that comes off the line once every hour?

That would probably be Mr Bill! Oh-Noooo.....

rich: I agree with your assesment. A diesel version and a convertible version could easily consume the 50,000 unit capacity left. Then a club or estate (shooting brake) could fill in the gap in a couple of years when demand for the standard models drops off.

Bilbo Baggins

· #15 · May 26, 2002

Increase production?

Certainly not at the expense of quality I hope!!!!

kgelner

· #16 · May 27, 2002

Not the productions I was looking for...

When I first entered the thread I mistakenly thought it would be about future MINI production*S*, as in commercials.

That led me to think of another poll option - keep the production numbers as is, but increase the output of MINI productions to one per day or so - I think I could happily wait the one and a half years it's supposed to take to get my S if I could watch a new MINI production each day until then!

A more serious side note - I wonder how much demand (at least in the US) is real, vs. (a) people on multiple wait lists and (b) treasure-seekers buying only to resell on eBay (could be some overlap)? How many people will drop off the lists when cars start to be delivered and the eBay sales prices go down?

Then the X factor - how much will US demand be stoked when the new Austin Powers is released?

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minirossa

· #17 · May 27, 2002

YES!!!!!! BMW should increase production!!!

Alot of people interested in the Mini hear there is
a long wait plus dealer markups & they just give up!

This is especially true for potential S buyers.

The original concept BMW stated was a well made, fun,
AFFORDABLE small car. They should stick to their goals!

Besides the Mini is bringing alot of people into BMW
dealerships that would not visit them otherwise. BMW
should be able to translate this foot traffic into sales.

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karmuze

Discussion Starter · #18 · May 28, 2002

Bilbo Baggins said:
Certainly not at the expense of quality I hope!!!!

I think that production increases to the maximum output can be achieved and still have overall quality levels improve as well. BMW installed its KISS information technology system in the Oxford facility when it was setup. Accurate tracking of parts, tooling, sub-assemblies, cars, and defect reporting and resolution is a key to quality improvement.

Originally posted by kgelner
A more serious side note - I wonder how much demand (at least in the US) is real, vs. (a) people on multiple wait lists and (b) treasure-seekers buying only to resell on eBay (could be some overlap)? How many people will drop off the lists when cars start to be delivered and the eBay sales prices go down?

My feeling is that only a fraction of the initial buyers(<25%) put their names on multiple lists. The attrition on the 'interest list' will accelerate when people are asked to put down a $1000 deposit on a car they won't be able to drive for a year. My guess is that current demand is about 40,000 for the 20,000 US MINIs projected for this first year. I think you will see waiting times fall to 6 mos. max, by this time next year, as the initial rush is satisified at the same time production is increased.

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