In our recent article about the Packard One-Twenty, we talked about how not to build a brand. This week, we’ll look at the postwar rebirth of BMW and how the company built one of the world’s most successful automotive brands. We’ll also take a look at one of your author’s personal favorite cars: the 1965-1975 BMW E9 coupe, including the 2000CS, 2800CS, and the legendary BMW 3.0 CSL.
The company that is now Bayerische Motoren Werke AG was born in 1913 as Rapp Motoren Werke, headquartered in a suburb of Munich, the capital of the German state of Bavaria. Its initial business was not cars but airplane engines, most notably a license-built version of Austro-Daimler’s V-12 aero engine, used in a variety of combat aircraft during the First World War. In 1917, Karl Rapp was forced out of the company he’d helped to found, and it became Bayerische Motorenwerke GmbH — commonly abbreviated BMW.
With aviation work in short supply after the Armistice, BMW branched out into motorcycles, launching its first bike in 1923. Automobiles followed in 1928, when the company purchased a failing business called Dixi, which manufactured a licensed version of the British Austin Seven. By 1933, BMW was producing cars of its own design. They were modestly sized and fairly expensive, but they had brisk performance and sleek, modern styling by Peter Schimanowski. The pinnacle of the line was the 328 roadster, which dominated European sports car competition until war intervened in 1939.
During World War Two, BMW turned its efforts to military vehicles and aircraft engines, some allegedly built by slave labor. As a leading producer of war materiel, the company’s factories were seized by the Allies in 1945 and it was not until 1947 that its president, Kurt Donath, obtained permission to return to motorcycle production. Automobile production did not resume until 1951.
The fifties were a difficult decade for BMW, with neither its cars nor its motorcycles selling in sustainable numbers. By the end of the decade, it was in serious danger of bankruptcy. Historian Jan Norbye has speculated that the only reason the company’s chief creditor, Deutsche Bank, did not force BMW into liquidation was that many of BMW’s other creditors were also Deutsche Bank customers, which would have left the bank with an even bigger net loss.
For a time, it looked like BMW would be bought out by its perennial rival, Daimler-Benz, but in 1960, half-brothers Herbert and Harald Quandt acquired a controlling interest. The Quandts started replacing key management personnel with their own people, and set about rebuilding the company, with the help of a DM 50,000,000 ($12 million) loan from the government of Bavaria. The result was the highly successful Neue Klasse (“New Class”) car line, which became the template for most future BMWs.
Let’s talk about what it takes to build (or rebuild) a successful brand.
Rule One: Don’t Set Your Sights Too High, Too Soon (But It Doesn’t Pay to Set Your Sights Too Low, Either)
BMW’s 1950s 500-series models (nicknamed Barockengel, “Baroque Angels”) were fine cars with attractive, if faintly dated styling, admirable engineering, and a modern V8 engine, a rarity in European cars of the era. There was also a lovely sports car, the 507, styled by Albrecht Goertz. Unfortunately, the Baroque Angels were far too expensive for their market even in America, where they cost almost twice as much as a contemporary Cadillac. Consequently, they sold in very small numbers and the company lost a significant amount of money on each one it built.
Kurt Donath tried to shore up BMW’s volume with the Isetta, a curious-looking “bubblecar” based on the Italian ISO and powered by a motorcycle engine. Looking more like the escape pod from some science fiction spacecraft than a car, the Isetta had little relationship to other BMWs in either appearance or performance. It was followed by the more conventional 700, which sold fairly well, but not enough to make up for the significant losses incurred by the 500-series.
After the Quandt buyout, new sales boss Paul Hahnemann decided the Neue Klasse sedans should be positioned squarely in the middle-class market against other upscale European family cars. With a starting price of 9,425 DM (around $2,700) in Germany, the initial 1500 sedan was nearly double the price of BMW’s own 700, but only about a third as much as the now-departed Barockengel. BMW decided to let the 700 die after 1965, concentrating their limited production capacity on the more profitable Neue Klasse, which turned out to be a sensible business decision.
Rule Two: You’ve Gotta Have a Gimmick
Although the Neue Klasse was more attractively priced than the 500-series, it faced an uphill battle against its established mass-market rivals. Product chief Helmut Bönsch told Car and Driver in 1969 that BMW had no hope of competing with Ford, Opel, and Volkswagen on volume or price; they had to offer something unique that would compel buyers to pay more for a BMW.
That something was certainly not going to be style. The Neue Klasse sedans were tall and boxy, which was certainly practical, but hardly fit mid-sixties notions of automotive sex appeal. Nor was it going to be exotic specifications, although BMW’s engineering was thoroughly up to date with unitized construction, overhead-cam engines, front disc brakes, and fully independent suspension. Instead, BMW’s managers decided that their calling card should be vigorous performance.
Performance, in this case, demands some qualification. By American standards, no sixties BMW was particularly fast. An early 1500 sedan took 14 seconds to reach 60 mph (97 km/h) and had a top speed of around 95 mph (153 km/h). The sportier 1800-TI could manage 0-60 mph (0-97 km/h) about 2.5 seconds quicker, with a top speed closer to 110 mph (175 km/h). What the Neue Klasse and its successors lacked in outright performance, however, they made up in well-sorted road manners and accurate, balanced controls. They had limitations, of course, like a tendency to slide the tail if you lifted off the throttle too abruptly in a fast turn (a characteristic of the semi-trailing arm suspensions that BMW used until the nineties), but overall, they handled as well as many contemporary sports cars. Unlike many sports cars, they also retained their composure over rough roads, thanks to ample wheel travel, low unsprung weight, and adequate damping.
For less enthusiastic drivers, the Neue Klasse‘s virtues were not immediately obvious. True, it performed as well as some V8-powered American cars, but $3,500-odd (U.S. POE) was still a lot of money for a stubby little car with an austere interior, a rather stiff ride, and few of the usual power conveniences. Still, the BMW quickly built a small but enthusiastic following for the simple reason that it had few serious rivals. If you wanted a relatively practical sedan that could still be driven con brio, your principal alternatives were the Alfa Romeo Giulia TI and the Jaguar S-Type, both of which tended to suffer dodgy electrics, haphazard build quality, and demanding maintenance schedules. The BMW wasn’t as pretty to look at as its British or Italian opposite numbers, but its engineering and assembly quality were top-drawer and it was far less fussy to own.
In short, BMW found a niche in which it had little serious competition, not so much through its own achievements as through the general mediocrity of its rivals.
Rule Three: Make Your New Products Logical Extensions of Your Existing Ones
Not long after the Neue Klasse sedans went on sale, Bönsch and Hahnemann started lobbying for the creation of a bigger sedan in the same mold, powered by a new, six-cylinder engine. The new six, designed by new technical director Bernhard Osswald and engineer Alex von Falkenhausen, debuted in 1968 in 2,494 cc(152 cu. in.) and 2,788 cc (170 cu. in.) versions. Compared to the Neue Klasse, the new sedans (dubbed 2500 and 2800, and known internally as E3) were scaled up in all dimensions, and had a number of mechanical refinements and detail changes. Conceptually, though, they were very similar to their predecessors, and they shared the same enthusiasm for aggressive driving.
The New Six sedans proved to be almost as popular as the Neue Klasse. In June 1969, Car and Driver‘s Patrick Bedard declared them more fun to drive than any other sedan in the world. The E3 sedans would sell more than 220,000 units between 1968 and 1977 and eventually spawned BMW’s highly successful 5-Series and 7-Series sedans.
In between the Neue Klasse and the New Six were the coupes, known to BMW as Model 120. First introduced for the 1965 model year, they were essentially sportier, two-door versions of the Neue Klasse sedan, sharing most of its mechanical components.
The Model 120′s styling had a convoluted history. Back in 1961, BMW had launched the pricey 3200CS, a hardtop coupe riding the old Barockengelchassis and powered by the last of BMW’s fifties V8 engines. The 3200CS was not styled by BMW, but by Giorgetto Giugiaro of Bertone, which also built the bodies. Although it was quite attractive, the coupe was very expensive and only 603 were built between 1961 and 1965.
When BMW’s in-house styling chief, Wilhelm Hofmeister, set out to design the Model 12, he apparently started with a big sheet of tracing paper, for the new coupe’s lines were very similar to those of its Bertone predecessor. Unfortunately, the styling of the early coupes was compromised by the smaller dimensions of the Neue Klasse sedan (whose inner body structure it shared) and some eccentric detailing, particularly an odd-looking front clip. As a result, it was more bulbous than sleek, a good deal less attractive than its Italian-built forebear.
BMW did not have the production capacity to build the Model 120 in-house, but even though the new coupe’s styling had been derived from Bertone’s 3200CS, BMW opted not to have Bertone build it, instead contracting production to the German coachbuilder Karmann. It was an economical solution, although the Karmann-built cars never matched the assembly quality of cars built at BMW’s Dingolfing plant and they had an alarming lack of rust-prevention measures.
Rule Four: Be Careful Not to Lose the Plot
In its original four-cylinder form, the Model 120 coupe did not make a strong case for itself. It was a kind of Bavarian Ford Thunderbird: a personal luxury coupe that sacrificed a good deal of the Neue Klasse‘s no-nonsense practicality for (somewhat dubious) styling flair. Admittedly, the Model 120 shared many of the virtues of its sedan brethren, including fine road manners, decent fuel economy, and generally excellent build quality. It wasn’t a great deal faster than the sedan, though, and it was nearly 50% more expensive, starting at $4,985 POE in the U.S. At that price, it became harder to ignore the fact that the Alfa Romeo Giulia Sprint was around $800 cheaper, arguably better looking, and equipped with features the BMW lacked, like a five-speed gearbox and four-wheel disc brakes.
The simple answer to these shortcomings was to add the E3′s six-cylinder engine to the coupe, which BMW did in 1968, earning the coupe a new type number: BMW E9. In the process, the coupe’s front end and wheelbase were both stretched, vastly improving its proportions in the process, and an attendant facelift brought a more aggressive, shark-like nose. Although the new 2800CS was around 300 pounds (136 kg) heavier than the four-cylinder 2000CS, the E9 was considerably better-looking and had nearly 60 additional horsepower (40 kW). The 0-60 mph (0-97 km/h) sprint could now be accomplished in around nine seconds and top speed approached 130 mph (205 km/h). Despite the additional muscle, it could still return close to 20 miles to the gallon (12 L/100 km) in more cautious driving.
Unfortunately, the six-cylinder coupe cost even more than before, starting at around $7,500 — about $1,800 more than an E-Type Jaguar and slightly more than a Porsche 911, both of which were faster and handled just as well. The pricing situation was exacerbated by a revaluation of the Deutschmark in 1969 that pushed the U.S. base price above $8,000. Car and Driver was smitten, but even they had difficulty rationalizing the coupe’s alarming price tag.
Still, unlike BMW’s sedans, the coupe was definitely not in a class by itself, which probably contributed to its very modest sales. Only about 3,500 six-cylinder coupes were built in 1969, 5,242 in 1970. The coupes were desirable in many respects (your author considers the six-cylinder E9 among the best-looking cars of its era), but their price exceeded their tangible virtues by at least 30%, which was the same mistake BMW had made with the Barockengel.
Rule Five: Be Prepared to Put Your Money Where Your Mouth Is
Nothing props up the perceived value of a sporty car like an authentic competition pedigree, so BMW decided to take the E9 coupe racing. The early efforts, run mainly by independent tuner Alpina, were none too successful, but they got a shot in the arm in May 1972 with the advent of the lightweight 3.0 CSL, which used thinner-gauge steel, Plexiglas windows, and many aluminum parts to trim more than 300 pounds (140 kg) from the E9′s curb weight. Once down to fighting weight, the coupe became far more competitive, though still not a world-beater.
That changed in 1973, when BMW and Alpina developed a wild-looking array of wings and spoilers for the CSL, aimed at reducing drag and eliminating the aerodynamic lift that had previously compromised the E9′s handling. The aero kit, which soon earned the CSL the nickname “Batmobile,” looked outré, but it worked, vastly improving the coupe’s high-speed handling.
With its Batmobile wings and a new 3,453 cc (211 cu. in.) version of the big six, the CSL suddenly became a fearsome contender. It won its class at the 24 Hours of Le Mans in 1973 and went on to dominate European racing until 1979, four years after it went out of production. It won a total of five European Touring Car championships and was highly successful in various U.S. events as well, seriously challenging Porsche’s previously unassailable IMSA domination.
All this sturm und drang did not make the production BMW E9 a hot seller. Like the contemporary Citroën SM, its sales were hit hard by the OPEC oil embargo of 1973-74. By the time production ended in December 1975, BMW had built a grand total of 30,546 six-cylinder E9s and 13,696 four-cylinder coupes (which had ended production in early 1970). Only 1,096 of those were CSLs, which were offered to the public only to homologate them for racing. If the coupes had been the company’s sole product, BMW probably would have ended up in receivership, especially if the expense of the factory’s racing efforts were added to the tab.
Fortunately, the E9 coupes eventually justified themselves with their spectacular racing success, which had a highly salutary effect on the company’s sporting image. Admittedly, the relationship between race cars and production models is usually rather remote, but the same connoisseurs who appreciate BMW-type virtues tend to be enamored of the fantasy that with only a few simple modifications, their car could lap the Nürburgring with the best of them. The CSL’s racing exploits certainly added luster to the E9′s successor, the E24 6-Series, as well as the later E30 M3 and M5 sedans.
Rule Six: Keep Telling the Same Story
BMW underwent a series of management shifts at the end of the 1960s. Harald Quandt died in a plane crash in 1967, leading to renewed fears that BMW would end up in the hands of Daimler-Benz. (It didn’t happen, and the Quandt family retains a controlling interest in BMW.) Powerful sales chief Paul Hahnemann, who had looked like a strong candidate for the new company chairman, was passed over in favor of Quandt Gruppe executive Eberhard von Kuenheim in January 1970, who then forced Hahnemann out. Hahnemann’s successor was an American named Bob Lutz, previously of Opel (and now GM’s product czar), who was the instigator of many of the factory racing efforts as well as the originator of the company’s Motorsport subsidiary. Lutz didn’t stick around for long, but von Kuenheim remained the head of the company until 1993, during which time BMW’s worldwide volume quadrupled.
In 1974, BMW’s U.S. ad agency coined the familiar “Ultimate Driving Machine” tagline, which the company has used ever since. Even as its cars grew bigger and generally more mainstream, BMW repeated that message relentlessly, to the point where it could be recited (however derisively) even by people who knew nothing about cars. Whether you bought it or not, there was little doubt about what a BMW was supposed to be.
Since the mid-seventies, many automakers, ranging from Pontiac to Mercedes-Benz, have made BMW’s cars the design bogeys for their new product development. What those rivals have really been after is not so much BMW’s performance, but the coherency of its brand image. Any marketing executive in the world would sell her own grandmother for the kind of branding BMW has achieved in the past 30 years.
There’s no particular magic to BMW’s success and if we were so inclined, we could be quite cynical about it. Ordinary sedans handle far better today than they did 40 years ago, and if BMWs have an edge, it is far narrower than it was in 1970. Even if you like BMWs (and here your author must confess a fondness), it’s difficult to justify their inflated prices unless you put a considerable premium on having a little blue-and-white emblem on your hood.
What we must respect about BMW as a company is not its performance, its styling, or its financial success, but its impressive sense of focus. That’s not to say it hasn’t periodically lost its way, or that all its decisions have been good ones, but the company has stuck to its guns for more than four decades. In a business that tends to water down every good idea and that seems always to chase the lowest common denominator, that’s an admirable achievement, even if the results aren’t always to taste.
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Our sources included Jan P. Norbye and the Auto Editors of Consumer Guide, BMW: Bavaria’s Driving Machines (Skokie, IL: Publications International, Ltd., 1984); Bob Lutz, Guts: 8 Laws of Business from One of the Most Innovative Business Leaders of Our Time, Second ed. (Hoboken, NJ: Wiley, 2003); “Car and Driver Road Research Report: BMW 1500,” Car and Driver August 1963; “Road Research Report: BMW 2000 CS,” Car and Driver April 1966; Patrick Bedard, “Viewpoint: Patrick Bedard: BMW 2500,” Car and Driver June 1969; and “Car and Driver Road Test: BMW 2800 CS,” Car and Driver December 1969, all of which are reprinted in Car and Driver on BMW Cars 1957-1977, ed. R.M. Clarke (Cobham, Surrey: Brooklands Books Ltd., 1986); “BMW 2800 CS,” Road & Track Vol. 21, No. 6 (February 1970), pp. 100-107; “BMW 3.0CS: A glorious blend of Grand Touring qualities,” Road & Track Vol. 24, No. 11 (July 1973), pp. 88-91; and “Giant Test: Five grand plus: Citroen SM v. BMW 3.0 CS, CAR December 1971, reprinted in Citroen SM 1970-1975 Limited Edition Extra, ed. R.M. Clarke (Cobham, Surrey: Brooklands Books, Ltd., 2001), pp. 62-72. Some useful information on the racing coupes came from Jonathan Thompson, “BMW vs Ford,” Road & Track Vol. 24, No. 11 (July 1973).
Production numbers and some technical details came from the BMW 3.0cs, 3.0csi, 2800cs, and BMW SL e9 models coupe site, www.e9coupe. com/, accessed 17 November 2008; Luca Ciferri, “Volume leader in automobile design,” European Automotive Hall of Fame, 2006, www.autonews. com/ files/euroauto/ inductees/giugiaro.htm, accessed 17 November 2008; and Mike Covello, Standard Catalog of Imported Cars 1946-2002 (Iola, WI: Krause Publications, 2001).
Historical exchange rates for the DM to the dollar came from Harold Marcuse, “Historical Dollar-to-Marks Currency Conversion Page,” UC Santa Barbara, 19 August 2005, www.history.ucsb. edu/faculty/ marcuse/projects/currency.htm. Our estimates of the present equivalency of historical amounts are based on the United States Bureau of Labor Statistics Inflation Calculator, data.bls.gov/cgi-bin/cpicalc.pl.