Chrysler and BMW: Auto Show Study in Contrasts

(MoneyWatch)  NEW YORK--Chrysler's Vice Chairman Jim Press rolled onto the stage at the New York International Auto Show in a retro Fiat 500, symbol of his company's merge-or-die countdown. "President Obama endorsed our merger with Fiat," he said, "and we're working 24 hours a day, seven days a week to make that happen."

The deal has to be concluded by May 1, or Chrysler--which the Obama Administration has deemed not viable as a stand-alone company--faces a likely bankruptcy. Press says the deal is on track.

When Press unveiled the obligatory new model, it was an all-new 2011 Jeep Grand Cherokee, leaving some in the audience wondering what Chrysler would look like when that car finally hits the streets.

Press didn't "do the numbers," instead concentrating on Chrysler's work to improve quality. But at its press event later in the day, BMW reeled off enough figures to fill an accountant's ledger, because it actually had something to talk about: profit. Other automakers might be scrounging for government cash, but BMW has $11 billion liquid dollars on hand.

The BMW Group--including BMW itself, Rolls-Royce and Mini--says it achieved a $456 million net profit in 2008 (after adjustments for residual value risks, credit losses and expenses associated with an "orderly retrenchment"). This was, of course, a 90 percent drop from 2007, but it was a profit nonetheless. The company sold 1.43 million vehicles (plus 100,000 motorcycles) last year; it has 25 percent of the upscale global premium market, making it number one in the segment.

Scots-born Jim O'Donnell, president of BMW North America, left out the thing about how far profits dropped, and he also did not mention that 2009 is not starting well. The core company's global sales (104,417) were down 17 percent in March from a year earlier. For the first quarter, sales (233,498) were down 21 percent from the same period in 2008. "It is still too early to talk about a global turnaround," said BMW executive board member Ian Robertson.

If there's a lesson in BMW's still very credible performance in this withering economy, it's to adjust sales expectations to reality. According to O'Donnell, the company's "early and proactive" 100,000-vehicle production cut ensured that BMWs did not sit unsold on dealer lots. As a result, he said, "inventories remained stable in a volatile market." BMW also reduced fixed per-vehicle and material costs.

The second part of the core strategy is product introductions. Moving forward, BMW is anticipating rolling out new models--seven this year, 15 next--"at a time when most experts forecast a market recovery." Without that recovery, next year's results may not be so rosy. For instance, the high-performance X6 M unveiled at the show--with 555 horsepower from a twin-turbo V-8--is just the kind of car that could fail to meet expectations in a continued downturn.

BMW had some environmental news. Europeans have been ultra-slow to offer hybrids, and are still trying--perhaps in vain--to convince Americans to buy diesels. A sign on the wall at the auto show pointed out that if U.S. drivers switched to diesel, it would save 2.1 million barrels of oil. Every day.

But BMW will finally introduce the two-mode X6 ActiveHybrid SUV (co-developed with GM, Chrysler and Daimler-Benz), later this year, with a promised 20 percent fuel-economy improvement. But according to preliminary reports, the hybrid paired with the X6's V-8 engine will still achieve only 18 to 19 mpg. BMWs in general don't get good gas mileage. The 2009 X5 xDrive48i I'm currently testing gets only 14 mpg in town, 19 on the highway.

Other BMW news: Electric Minis are coming to metro New York, with 10 placed in the city's own fleet and 200 offered to private customers. BMW's Spartansburg, South Carolina plant (undergoing a $750 million expansion) is getting 63 percent of its energy from landfill-sourced methane, and the company is exploring the addition of wind energy. Cool stuff, which only BMW's relatively comfortable financial picture allows it to explore.

Jim Motavalli photo