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

["Tony Pucci" <tonyuss@xxxxxxxxxxx>]

Coincidentally, Consumer Reports magazine did a story called first year 
blues.  The worst manufactirer on the list was, you guessed it, BMW 
automotive.  They claim 79 problems per 100 vehicles in the first year, 64 
in the second year, and 34 in the third year.  This was almost double than 
the average for all new model combined.
Tony
97 R1100RS


>From: "Steve Makohin" <wateredg@xxxxxxxxxxxx>
>Reply-To: oilheads@xxxxxxxxx
>To: "Oilheads List" <oilheads@xxxxxxxxx>
>Subject: A look inside BMW, quality, customers, etc (was "Don't buy a  new 
>model BMW")
>Date: Thu, 1 Sep 2005 23:07:26 -0400
>
>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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