BMW's independent future more secure
Having now got rid of its loss-making Land Rover and Rover Cars subsidiaries in the UK, BMW's share price has strengthened in Germany and analysts regard the company as less vulnerable to a take-over bid. There are plans to launch a whole new family of BMW off-road vehicles. The Quandt family - which has a controlling 48% - has denied that it intends to sell out, but is seeking a significant improvement this year over the group's $2.5 billion losses in 1999. In an interview in today's Financial Times, BMW chairman Joachim Milberg chairman justified the decision to sell Land Rover, one of the most famous off-road vehicle brands, by pointing to the growing success of the German carmaker's own X5 "sports activity vehicle". "A credible differentiation between the products offered by Land Rover and the X5 would have become increasingly difficult," Milberg said. He predicted that the X5 would become "the parent" of a new family of off-road vehicles. In the medium term, he suggested that the success of such models would underpin BMW profitability and confound critics of its decision to abandon Rover as a mass carmaker. He claimed that the strategy would shore up BMW's independence. Milberg predicted that BMW would "grow profitably with the launch of a small BMW, the X family and with products under the Mini brand". "The clear message coming from BMW's headquarters in Munich is that management of the German group believes that it has weathered the storm over Rover, and placed itself in a much stronger position for the future," comments the FT.
Article Date: May 25, 2000