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BMW Cites Challenges and Opportunities in 2010

When BMW drive its new 340-horsepower twin-turbo sDrive35is version of the Z4, due this spring, out onto the floor at the Detroit Auto Show, the company proudly proclaimed that that the supercar has the same grams per kilometer carbon dioxide profile as the standard Z4 roadster.

But it's quite likely that many of the American journalists in attendance had no idea what Ian Robertson, a member of BMW's board of management, was talking about. After all, the darned thing goes zero to 62 mph in 4.8 seconds.

One of the challenges for a German carmaker is reconciling environmental standards crafted for the European Union and those of its other markets, especially the ultra-important U.S. (more than 20 percent of world sales). The EU has dictated strict CO2 rules of 130 grams per kilometer. They phase in, and 65 percent of each manufacturers' new cars must be in compliance in 2012 (75 percent in 2013, 80 percent in 2014 and 100 percent after 2015).

The U.S. has incorporated such regulations into its Corporate Average Fuel Economy (CAFE) dictates, also kicking in circa 2012. The U.S. regs aren't as demanding, especially in the early years, they're expressed differently, and the American press has yet to focus on their implications.

One of its biggest challenges is convincing Americans to buy diesels. As a key player in BMW (and other German carmakers') green strategy, diesels remain a tough sell for American customers who prefer the environmental message of hybrids (a late addition to the BMW fleet, with the X6 and hybrid 7-Series). Still, Robertson said that one in three U.S. BMW X5 customers is now buying a diesel, thanks in part to an aggressive marketing strategy that includes loaning them out to consumers whose cars are in the shop. "We are evaluating more diesels for the U.S.," Robertson said.

BMW sold 1.29 million cars in 2009, a 10.4 percent drop from 2008. It sold 216,000 Minis and 1,000 Rolls-Royces (many in the Middle East of course, though sales may fall off in Dubai). In the U.S. for 2009, sales of 242,000 cars represented a 20 percent decline from 2008. In Detroit, however, Robertson saw an upturn. "Since September," he said, "global sales have been above 2008. In December, we sold 124,000 vehicles, a more moderate decline than we anticipated."

For 2010, BMW anticipates what Robertson called "single-digit growth."

It's interesting to note that BMW's German rival Volkswagen had a banner year in 2009, with record sales of 6.29 million. One big reason for this was the generous worldwide "cash for clunkers" programs that clearly benefited makers of cheap and cheerful economy cars.

There has been a blizzard of new car introductions from BMW, with more coming, and Robertson said that BMW will have renewed 60 percent of its product line by the end of 2012, with a $1 billion investment. The company employs 50,000 people in the U.S., where it has recently invested $427 million in BMW and Mini plant capacity.

The U.S. has several "mega-cities," with population over 10 million (New York and Los Angeles qualify), and they could offer customers for BMW's "Mega-City Vehicle," a four-door electric headed for the market in mid-decade. The current electric Mini E (600 are being tested in Europe and the U.S.) and Concept ActiveE (a battery-powered 1-Series Coupe introduced in Detroit and headed for a similar program) are test beds for the commercial launch of the Mega-City Vehicle. From the evidence of the Mini E, it will need a hardy, all-weather battery pack if it is to succeed in rough use around the world.

BMW ActiveE photo by Jim Motavalli