With the launch of the all-new Mini, coupled to the investment in additional production capacity at Mini’s Oxford plant, BMW is charting a growth path for its British-based small-car brand, writes Dave Leggett.
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Output of the spiritual successor to the revolutionary original Mini has comfortably exceeded its volume targets, annual production reaching some 200,000 units in 2005 – twice the originally planned capacity.
The company is now forecasting that annual sales and production will rise further to reach some 240,000 units by 2008, when a further, larger model – loosely trailed by the Mini Traveller concept and likely to be called the Mini Clubman – will be added to the Mini line-up.
BMW is opting to gradually extend the Mini brand offering rather than risk a single-model strategy that could eventually invite declining sales of the mainstay 3-door model (which in its new form sticks with the same basic look as the previous Mini, itself paying clear homage to the BMC original unveiled way back in 1959).
After the planned market introduction of the larger, stretched Mini (Clubman) in 2008 – seen as essential so that the Mini customer base can gravitate from the compact 3-door to a larger model – other Mini models and body types, such as a pick-up or a small SUV, could also be rolled out.
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By GlobalDataAt a media launch for the new Mini held this week in Barcelona, Marcus Kreig, Mini Global Product Manager, told just-auto that the improvements to the new Mini will all help to boost sales and encourage many existing owners to upgrade. The new Mini is fitted with a new 4-cylinder 1.6-litre petrol engine supplied from BMW’s UK engine plant at Hams Hall and also has a fully redesigned interior. In addition, there are changes to the suspension set-up designed to enhance the driving experience.
On the production engineering side, attention has been paid to making the new Mini easier (and cheaper) to build than the outgoing model, something which should improve profitability. Profitability on US sales has been dragged down by the weak dollar, despite high demand. In 2005, some 41,000 Minis were sold in the US market.
“We could sell more Minis in the US, without a doubt,” Kreig said. “And, of course, we would make more money on US sales if the exchange rate went the other way.”
The Mini marketing team could well face competing demands from sales organisations around the world for the additional incremental output that is planned for the Oxford plant over the next few years.
Asia is seen as another potential sales hotspot for Mini. Kreig acknowledged that Mini sales in China are currently low, but said that there are very good prospects for growth there.
“In China we are building sales in the major urban centres where there is a rapidly growing market for Mini – places like Beijing and Shanghai where interest is already very high. But we are not planning nationwide sales in China,” he said.
In the UK market – Mini’s largest – Mini sales were just under 45,000 units in 2005 and Mini’s marketing personnel are confident that the figure will be topped in 2007 as the model changeover works through.
One of the most significant changes to the latest Mini is in the area of powertrain. The new 1.6-litre petrol engine supplied to Mini from BMW’s historically underutilised Hams Hall engine plant replaces the Chrysler Tritec engine made in Brazil.
In collaboration with PSA, the new Mini engine is made in France with the BMW version assembled at Hams Hall. Indeed, PSA could become the provider of a diesel engine for the new Mini, replacing the Toyota diesel fitted to the outgoing Mini One; BMW says that the first half of 2007 will see the debut of a new diesel Mini that will feature ‘the most advanced turbodiesel technology’ in Mini’s class.
The only other variant is the cabrio – the current Mini Convertible was launched in 2004 and will continue in its current form for the ‘foreseeable future’, BMW says.
Summary
With the new Mini and the investment in additional capacity at Mini’s Oxford plant, the constituent parts of a Mini brand growth strategy are discernable. But it is a strategy founded on a desire to protect the Mini brand’s proven strengths and steer a steady course. New Mini looks very like the outgoing model and that is understandable. Why meddle with a basic body shape that has been so massively successful? It also helps keep residuals up.
While product development on the latest generation 3-door model is evident, it is subtle: improved engines; a new interior; ‘surprise and delight’ ambient lighting in the cabin; suspension refinements. Growth of the Mini brand further out comes primarily from adding new models to extend the appeal to other sections of the market. It starts with the stretched ‘Clubman’ in 2008 (with a Frankfurt Show ’07 debut). It is planned that other models will follow.
But what of low profitability on US sales caused by a weak dollar (which is unlikely to move the other way anytime soon)? BMW has long maintained a policy of taking vehicle production to where the market is and the strategy has been highly successful. The key is a robust production system that can instil homeland values to a production site anywhere in the world alongside a strong brand.
In a few years’ time, the parent may well feel that some Mini production could be moved to the US. That could ease capacity pressures at the Oxford plant and lessen exchange rate losses on US sales.
By then, BMW executives may well conclude that the Mini brand is indeed robust enough and established enough to withstand a little offshoring. And further out? BMW already assembles cars in China. Why not develop an Asian production base for Mini too?
Dave Leggett
See also:
GOLDING’S TAKE: Very many MINI changes; very few on view
PARIS PREVIEW: Mini lifts its new skirt
UK: BMW starts series production of new Mini
