A look inside BMW, quality, customers, etc (was "Don't buy a new model BMW")

["Steve Makohin" <wateredg@xxxxxxxxxxxx>]

Hello all,

[snip Ben Barkow's write-up]

You introduce a number of accurate observations, but also some questionable
conclusions. The source of my information and perspective includes, amongst
others, J.S.Powers & Associates, and the book "DRIVEN: Inside BMW, the
world's most admired car company" (author is in no way associated with BMW,
and yes, it addresses bikes as well).


re: Initial Defects:

One of many measures of "vehicle quality" is the number of defects within
the first year of new vehicle's ownership. The stats clearly show that BMW
(automotive) is "about average" when compared to the auto industry, and
actually worse than Lincoln, Buick, and Cadillac when using this measure. If
his measure is your one and only criteria for assessing the desirability of
a new vehicle, steer clear of BMW four-wheelers and get a Lincoln or a
Lexus.

Historically speaking, BMW (automotive) has a long history of initial
defects and other "quality" issues. The famous 2002, for example, would pop
it's side windows when driving at the edge of the performance envelope. In
spite of these issues, BMW has become the most admired car company in the
world as confirmed by their competitors and by auto industry critics. A
major reason for this is that BMW, as a company, has extremely strong
branding, and a cohesive "personality" that unites all their vehicles under
the BMW brand umbrella. BMW accurately identifies it's target market through
psychographics (rather than demographics), which clearly identify a
"typical" BMW owner. Note the stress on the word "typical", as it identifies
the pattern of the mass, rather than each individual, because some
individuals, who are in the minority, do not represent the "typical" BMW
owner, or the mass.

Characteristics of a "typical" BMW owner include, but are not limited to:
 o Places high importance on an "exciting drive"
 o Places high importance on a vehicle's "character"
 o Prefers understated styles rather than louder statements of "I have
   arrived", such as that which is found in Mercedes Benz
 o Likes advanced technology
 o Places lower emphasis on low initial purchase price, low cost of
   maintenance, low frequency of repairs

DRIVEN talks a lot more to this point. So, once we understand the BMW brand,
and we understand the "typical" BMW owner, it is easy to understand that the
vast majority of BMW owners buy BMWs for something other low cost of
ownership, low repair rates, or low number of initial defects.


re: Initial Defects in First-Year products

Informed consumers know that in any complex, non-appliance product such as
cars, motorcycles, computer software, etc., the "Point Oh" phenomenon (such
as Word 5.0, or the first year of a new model) results in a higher than
usual number of issues. Some vehicle manufacturers are better than other in
this respect. BMW is not one of the better ones, over all. The X5, for
example, had a lot of early teething pains. See the previous section for why
this is not a critical issue for BMW, and why BMW continues to prosper, and
enjoys profit margins that are otherwise unheard of in the industry, in
spite of unflattering "defects in first year" and "failures after first
year" numbers.


re: BMW Engineers

I don't think any level-headed person would argue that BMW's engineers are
perfect, that BMW is always right, or that BMW always does everything right.
To understand where BMW's engineering focus truly shines, see the first
point made in this post. BMW's four-wheelers, it is agreed by industry
experts, are unique in their character, enjoy a superb brand position, and
have exciting characteristics. Much of that requires engineering talent.
Read the book "DRIVEN" to understand more about this. BMW also applies their
engineering talents to improve quality (as measured by initial defects, fit
and finish, and reliability), and they have improved a lot over the decades.
Still, their primary focus is not in these areas, and it shows.


re: Declining quality

Stats show that BMW's vehicle quality, as far as four-wheelers go and as
measured by the number of defects in the first year of ownership, and in
subsequent years, has been declining in recent years. DRIVEN attributes a
large portion of this to the relative weakness of the DM in relation to the
US dollar since the mid to late 1990s. BMW had to reduce costs to remain
somewhat price competitive, and they did this in a number of ways including
(but not limited to) setting up manufacturing facilities in foreign
countries, and using less expensive components.

This issue of quality also extends to "perceived quality", that is the
customer's perception of quality, measured independently of quantifiable
metrics such as "defects per hundred new vehicles in the first year of
ownership." One of these "perceived quality" items in BMW's 4-wheeler's
interiors, which in recent years have been restyled dramatically in what has
been called by BMW the "Flame Surface" styling language. The consensus of
the buying public and of critics alike is that the interiors *look* cheap,
even though they may not, in fact, be so. This has resulted in a perceived
reduction of quality in addition to actual declines as measured by various
industry metrics.


BMW Apparently not Negatively Affected

If we take note of the recent decline in BMW's quality metrics (defects per
100 new vehicles on the rise and only "average" as compared to the rest of
the industry, etc), the decline in perceived quality (customers feeling the
interiors look cheap), BMW's exterior styling direction (the kindest thing
the industry and many customers have been able to say is that "it is not for
everyone"), and the near universal condemnation of BMW's apparent
infatuation with gadgetry (iDrive has been hated since it first appeared in
the 7 series, still hated two revisions later in the 5 series and 6 series,
and still not liked in the new 3 series; the 5 series "Launch" feature is
prone to transmission failure when used exactly as directed; the 7 and 5
series turn signal indicators cannot be manually canceled once engaged,
etc), one might reason that BMW is on the slippery slope of corporate
decline.

Yet in spite of these issues, BMW is achieving record profits, and record
unit sales figures, so they don't seem to have a lack of customers. DRIVEN
attributes this to BMW's extremely good handle on their customers (read
DRIVEN for details). This does not mean that BMW does what their customers
want, but rather, BMW does what enough people want to supply BMW with a
sufficient number of customers to attain their unit sales and profit
figures. BMW has truly been an industry leader in this respect, by defining
a market segments through the products they offer, rather than making
products to satisfy an identified market segment.

BMW's new vehicles are attracting a new BMW customer. Sadly for many of us,
we will be left behind because BMW will transition into a product line that
no longer reflects our values, but which captures the attention and desires
of a new and different BMW customer cadre. This is actually happening now.
When you look at the current 7, 6, 5, and 3 series, the have distinct Asian
styling cues, as seen in the swooping, stylized headlights, as one example.
Analysts note that early reports indicate significant numbers of BMW
customers are new to the brand, and are moving from Lexus and Acura (Asian
brands) to BMW.

Similarly, retailers report that the majority of BMW K1200S customers are 
not existing BMW riders who are upgrading. Rather, they are new to the BMW 
brand making this their first BMW bike.


I recommend the book "DRIVEN: Inside BMW, the world's most admired car 
company" for anyone who wants to understand BMW's direction, and why they 
are the way they are. I believe that through understanding, you may gain 
some insight into BMW, and perhaps ease some frustration if BMW's recent 
direction has left you cold.

- -Steve Makohin
 '01 R1100S/ABS
 Oakville, Ontario, Canada

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