BMW is one of the leading carmakers in the world. It is an established brand, which is especially popular among high-income customers who want their cars to be functional, good-looking, and expensive. In the first decade of the century, the company has managed to grow sufficiently. Even though it maintains its competitive position in the luxury car market today, there are significant issues that affect the company’s popularity and profitability. In this essay, I will show that BMW’s place in the automobile market is likely to suffer in the next few years.
The key issues that have an adverse effect on the company are its risky moves with regards to new model development. It is no secret that the competition in the luxury car market is high, and the companies do everything in their power to attract customers by releasing new models and improving old ones. However, not all the BMW models released in the past few years were as great as the executives had hoped. For example, models from BMW 1-series, both old and recent, have received criticisms from customers and reviewers. The 2016 release of the 1-series aimed at correcting the problems that the customers found in its predecessor (Knapman par. 2). However, the model still had significant drawbacks to its design. For instance, the car is not as spacious as other cars of the class: Knapman notes that the rear middle seat is narrow and uncomfortable, door openings are small, and the trunk section is not spacey enough to carry family luggage (par. 3-5).
One of the most significant aspects of luxury car models is their comfort; people who buy expensive cars want to be able to drive them without feeling tired and uncomfortable. However, this might not be the case with BMW 1-series: poor road noise suppression and firm seats may affect the comfort of both the driver and passengers (Knapman par. 7-8). Moreover, the rear window is small, which makes reversing and parking more difficult for the driver (Knapman par. 13). Overall, even though BMW produced the model to improve on its predecessor, the design failures make it less appealing to the buyers, hence affecting the brand’s overall popularity. Knapman notes that the original 1-series model was “cramped and uncomfortable, but it still found plenty of buyers because it had that desirable BMW badge on its nose” (par. 1). Nevertheless, given the overall drop in satisfaction levels, it is likely that the brand name will lose its effectiveness in attracting customers in the future.
Another critical issue that BMW has recently encountered concerns its reliability. Both new and old models produced in the last years show a decreasing level of customer satisfaction, particularly due to the frequency of maintenance. Reliability is also a crucial factor for customers looking to purchase a luxury car. The models offered by luxury brands are usually more expensive than medium-class cars, such as Ford or Toyota, and the cost of their maintenance and replacement parts is much higher, too. This means that customers have certain expectations when buying a higher-class car, and any reliability issues are likely to affect the brand’s reputation in the worse way possible. One of the most recent examples of BMW’s safety issues is the N47 diesel engine failures. Despite attempts to address the problem dating back to 2007 when BMW fitted its newly created 2.0-liter diesel engine to a wide range of BMW models, owners all over the world still report failures (Briscoe par. 5-6). The failures cause the engine to stop working abruptly, both at low and high speeds, posing a threat to the user’s safety (Briscoe par. 6). Moreover, the cost of repairs for this type of malfunction is quite high, since a replacement engine could be worth up to €6000, which is “Bad enough if you had bought the car from new, but disastrous if you were a second-hand buyer on a tighter budget” (Briscoe par. 6). The issue increased customers’ complaint and eventually led to lawsuits, which negatively affected the company’s public image.
Overall, both issues are likely to have an increasingly adverse effect on BMW’s sales in the future. The negative outcomes have already hit the company, as it reported a decrease in both annual and monthly sales in December 2016. Press Club USA says that “the BMW Group in the U.S. (BMW and MINI combined) reported December sales of 37,493 vehicles, a decrease of 5.4 percent from the 39,634 vehicles sold in the same month a year ago” (par. 4). Even more notable are the company’s annual sales, which were 9.5% lower compared to the previous year (Press Club USA par. 1). The customers’ opinion of the brand’s reliability is also worse than of other luxury car providers: Knapman states that BMW ranked thirteenth out of twenty-six in the 2014 satisfaction survey, whereas the company’s primary competitor Mercedes-Benz was in the third place (par. 20). If BMW leadership does not address the properly, it could affect brand image, brand equality and competitiveness.
Briscoe, Neil. “BMW’s Timing Chain Problem Comes Back to Haunt Carmaker.” The Irish Times, 2016. Web.
Knapman, Chris. “BMW 1-Series Review: Better Than an Audi A3?”. The Telegraph, 2016. Web.