BMW: Surviving Difficult Times

Bayerische Motoren Werke AG, more commonly known as BMW, is a manufacturer of luxury cars and motorcycles. BMW has remained an independent company at the time when consolidations are popular around the world.

The company was established in 1917 although its beginnings can be traced to as early as 1913 when Karl Rapp began building aircrafts for the Austrian army as the World War I was anticipated. After the war, Bayerische Motoren moved to produce train brakes.

Rapp started producing motorcycles in the early 1920s. The first model was equipped with a flat twin engine. Its valves are inverted to keep the oil clean. The motorcycle was called R32. R32 held the record for the fastest motorcycle speed until 1937 when Ernst Henne drove the R32 at a speed of 279.5 kph in 1929.

Bayerische Motoren produced its first luxury car called Dixi in 1929. That year, Dixi won the International Alpine Rally. A better Dixi was introduced in Berlin in July 1929. It has better brakes, more attractive interior and improved handling.

After the World War I, BMW produced a new luxury motorcycle called R24. There were more than 10,000 units of R24 produced in 1949. In 1950, 17,000 units were produced, 18% of which were exported to other markets.

In the late 1950s, the market for expensive cars increased so BMW began producing the 700 LS model, a rear-engine car which became the company first long-term success in many years.

In the early 1970s, BMW became interested in motor racing. After dominating the Formula 2, BMW decided to compete in Formula 1. It produced the Brabham and won the Formula 1 World Championship in 1975.

Through the 1970s and 1980s, the demand for expensive cars grew bigger. In North America alone, 71,000 units were sold in 1984. In the 1990s, the greatest threats to BMW were the Japanese-made cars which adopted European designs but were sold at lower prices.

The 1990s is known as the Rover era. BMW purchased the Rover Group in 1994. The acquisition gave BMW a felt presence in the SUV market and stunned even Honda Motor Company who held 20% of Rover. However, the Rover deal failed miserably and the acquisition was referred to by the May 17, 2000 issue of the Financial Times as the “worst investment deal in German Corporate history.” Later, Ford Motors Co. acquired Rover’s SUV group from BMW.

BMW focused on manufacturing luxury cars especially with Rolls-Royce coming under the control of BMW in 2003.