From the Saturday, 26 February 2005 New York Times:
BMW Tries to Refresh the Look of a Successful Model
By MARK LANDLER
MUNICH, Feb. 21 - As he prepares for the introduction of BMW's new 3 Series, Helmut Panke, the company's 58-year-old chairman, sounds almost like a dad misting up over his debutante daughter.
"Emotionally, the 3 is the heart of BMW," Mr. Panke said in an interview here, using the in-house shorthand for this perennially popular compact sports sedan. "Replacing it is close to everybody's heart."
As with many fathers, there is also an element of cold calculation in Mr. Panke's hopes for his baby. The 3 Series accounts for 44 percent of BMW's worldwide sales, making it the linchpin of a company that is generally regarded as Germany's most successful carmaker.
With so much riding on a single car, Mr. Panke cannot afford to put a foot wrong when he squires it on to a floodlit stage Tuesday at the Geneva Motor Show, where it will make its formal debut.
"You can take risks at the margins," said George Peterson, the president of AutoPacific, a market research firm in Tustin, Calif. "But when you're talking about the family jewels, you better make sure they are protected."
Few cars, or consumer products of any kind, have appealed to the changing tastes of upscale buyers with as much dexterity as the 3 Series. In the 1980's, it was the quintessential yuppie car - the "Bimmer" coveted by newly minted M.B.A.'s. In the 1990's, it catered successfully to varying lifestyles, with versions ranging from a utilitarian hatchback to a sporty station wagon.
BMW's challenge, Mr. Panke said, was how to improve something that arguably needed little improvement.
"Correcting mistakes is easier than sitting at the top of the mountain, at the top of market success," he said. "You have to push the envelope one step further. You have to set the benchmark one step higher."
BMW has left little to chance - posting advance photos of the new 3 Series on its Web site and letting automotive journalists drive around in the car in the Spanish seaside city of Valencia last month. To judge from the photos, it tamed the swooping pencils of its car designers.
"They've taken a new approach with the design, which is more conservative," said Ferdinand Dudenhöffer director of the Center for Automotive Research in Gelsenkirchen. "They learned their lesson."
The last time BMW brought out a new style under a similar glare of publicity was in 2001, when it radically redesigned its flagship 7 Series sedan. The reaction from auto critics and the public could be summed up in one word: "ugh."
With its protruding rear trunk and headlights that resemble granny glasses, the car provoked howls from BMW enthusiasts. Some even set up an online petition to push for the ouster of BMW's chief designer, Christopher E. Bangle, an American they accused of wrecking the nameplate's image.
By the time BMW rolled out its new 5 Series sedan in 2003, the passions had cooled - but only a bit. The Web site of the public radio program, "Car Talk" declared: "The best place from which to enjoy the redesigned BMW 5 Series is the driver's seat. That way, you don't have to look at it."
"These are what we call bipolar cars," Mr. Peterson said. "There are camps of BMW owners who absolutely hate the new style. But the people who buy the car are completely satisfied with it."
The impact of all this on BMW's sales is difficult to judge. Sales of the 7 Series, which starts at $70,595 in the United States, declined 17 percent last year. But BMW claims it has outsold the previous generation of the 7 Series over similar time periods.
Sales of the 5 Series - which costs $42,000 to more than $60,000 - rose 24 percent overall last year. But they fell 3 percent in the United States, an anomaly BMW attributes to sales incentives it offered in 2003 to clear the old versions from its dealerships.
There is little debate that the current 3 Series, the model's fourth generation, is showing its age. BMW sold 449,000 vehicles worldwide in 2004, a 15 percent drop from the previous year. In the United States, where the 3 Series sold 106,000 units, or roughly 36 percent of BMW's total sales, including sport utility vehicles, the drop-off was less than 5 percent.
BMW Tries to Refresh the Look of a Successful Model
Published: February 26, 2005
(Page 2 of 2)
As part of BMW's effort to overhaul its product lineup, it is introducing a new subcompact, the 1 Series. This has enabled BMW to make the 3 Series slightly longer and wider than its predecessor. It also has a more powerful engine. BMW used a mixture of aluminum and magnesium to make the engine lighter, which it says has preserved the car's trademark agility.
The 3 Series is noticeably trimmer in the hindquarters than the 7 Series, and it does not have the Dame Edna headlights. It also does not force buyers to take iDrive, a unpopular feature that is standard in the 7 and 5 Series. A large knob in the center console, iDrive controls the air flow, navigation system and the like. It has flummoxed many owners.
BMW will not announce American prices for the new 3 Series until the New York International Automobile Show in late March. But it said buyers should expect only a modest price increase, amounting to less than $200 for a 325i with a typical package of options. The standard 325i is currently priced as low as $29,995. The higher-powered 330i costs roughly $6,000 more.
Despite its defense of the new designs, it is clear that BMW has taken the criticism to heart. It will present a tweaked version of the 7 Series in Geneva, which tones down some of its more notorious features.
For all that, BMW insists the less radical redesign of the 3 Series is not a reaction to the outcry. Given the popularity of the model, the company said it had to find a way to refresh the look without spoiling it.
"The 3 Series is such an icon that everybody knows it," Mr. Bangle said. "With an icon, you don't walk away from it. We've never redefined the mission of the 3 Series. The 7 Series was redefined."
Similarly, BMW has stuck to a consistent marketing strategy. It will pitch the new 3 Series to people who value performance, handling, agility - the ingredients that BMW claims make it "the ultimate driving machine." It has used this tagline in its advertising for nearly 25 years.
Trading on the familiarity of the car, the print and television ads for the 3 Series will feature dramatic scenes - one shows a parachutist waiting to jump out of a plane - in which the participants count from one to three. At the stroke of three, the new car bursts into the scene.
BMW sells half of its 3 Series in the United States to women. And though it is viewed as a youthful car - the average age of its owners is 42 - it is also popular among people aged 50 to 55.
With that broad a market, BMW said it has cultivated an "inclusive" rather than an exclusive image. It traces this shift to 1987, when the stock market crash put an end, at least temporarily, to 80's-style materialism.
"The one thing we did differently in the 90's is that we didn't sell the 3 Series as a luxury car," said James McDowell, vice president of marketing at BMW North America. "We sold it as a fun-to-drive car."
BMW, it must be said, no longer owns the market for fun-to-drive cars. Infiniti, Acura, and Cadillac sell cars that compete directly with the 3 Series; some, like the Infiniti G35, have more powerful engines.
BMW has also faced questions about its quality and reliability, though not of the same gravity as those dogging Mercedes-Benz. Mr. Peterson of AutoPacific said that in his research, the BMW brand name was still a gold standard - tying in most categories with Lexus of Japan.
In Mr. Bangle's view, the 3 Series may soothe those who still quarrel with his other redesigns - since it will show how they fit into a spectrum, from the pint-size 1 Series to the X5, a sport utility vehicle.
"I'm glad we've been able to show all three acts of the play," Mr. Bangle said. "Now, the audience and critics can do a summation of show, and not just look at the individual pieces."