2005 MINI Cooper S Convertible by TCC Team (9/6/2004)
You have to put the top down. It says so right here.
Panke Pushing BMW for More Growth by TCC Team (9/6/2004)
CEO sees plenty of opportunities, also rues quality problems.Small doesn’t sell — or so goes the old automotive axiom. But these days, U.S. car marketers are singing another tune. Small is beautiful, and there’s no better example than the MINI.
Since it made its U.S. debut two years ago, BMW’s British brand has handily outperformed initial expectations. And though sales volumes have slipped a bit this year, analysts expect the new MINI convertible to quickly rebuild the brand’s momentum. But for how long?
Though it’s clearly more than a fashion statement, MINI competes in a fickle segment with little consumer loyalty. And it’s a segment likely to get more crowded, with manufacturers ranging from Mazda to General Motors readying an array of minicars and microcompacts — even BMW, which plans to bring its new 1-Series to the U.S. in 2007. So MINI’s planners are working up an expanded product portfolio designed to ensure their marque isn’t just a one-hit wonder.
“Four years ago, when we thought about bringing MINI to the U.S., there was no market for small cars here,” recalled Rich Steinberg, the executive in charge of U.S. planning and marketing for the MINI brand. “People thought we were crazy.”
No one thinks that now. Though there’s still little demand for stripped-down econoboxes, MINI’s initial success demonstrates there’s a very real market for small cars providing big value. Through August of this year, American motorists have purchased 23,425 of the pint-sized hatchbacks. That’s down about three percent compared to last year, but still more than MINI originally expected to sell in an entire year in the U.S.
It has helped that the automaker continues rolling out spin-offs of the original model — such as the John Cooper Works and now, the MINI Convertible — while offering countless options that encourage personalization. The ragtop is expected to account for about a quarter of MINI’s global sales, but with the U.S. the biggest market for convertibles overall, the new model should generate a third of MINI’s American sales in 2005.
But Steinberg conceded that the convertible won’t be enough to keep things going for long. “By 2006 (sales) will come down as we reach the end of the current product’s lifecycle.” He expects to see volumes “kick up again in 2007 and 2008,” which is critical to long-term plans. The automaker is encouraging dealers to set up separate facilities for the MINI brand, but to get retailers to make those costly investments, “means more volume, and that means we need more variants,” Steinberg asserts.
From niche to natch?
MINI’s initial success has rested on a relatively small niche of buyers, concurred analyst Jim Hall, of AutoPacific, Inc. And if the brand’s second generation is simply more of the same, he believes “they’re tapped out.” The challenge, Hall emphasized, is to come up with a family of products that stay true to the original, yet offer more range and flexibility.
There’s certainly a precedent. What only later became known as the MINI was actually sold under four different British nameplates, including Austin. The original car went through a rapid series of changes after its debut, more than four decades ago. Over the years, an array of variants emerged, some larger, some more powerful. There were MINI four-doors and MINI panel trucks.
And now, BMW is studying which of these and other options can work for the new MINI, hints BMW AG Chairman Helmut Panke. “MINI will get additional body styles. We can’t wait,” he acknowledged during an interview with TheCarConnection. But Panke is quick to stress that with future products, the look and feel of the original car “must be preserved.”
How do you pack more car into essentially the same footprint? That’s the challenge facing Gert Hildebrand, MINI’s design director. “It’s like mathematics,” he said, somewhat cryptically. “The more restrictive the formula, the more creative you must be.” But Hildebrand told TCC he sees “hundreds” of possible spin-offs. “The sky is the limit.”
Among the possibilities, MINI could go for something smaller than the original, in line with the City Coupe sold by the Smart division of DaimlerChrysler. When Smart debuts in the U.S. in 2006, it will introduce its largest product yet, a minicar crossover called the formore. That’s likely not a strategy for MINI, Steinberg underscores. The British brand does not want to nudge into BMW’s territory. Nor does MINI intend to do a product solely for an individual market, even one as significant as the U.S.
But something a bit larger than the current MINI Cooper seems essential, said Hall. “They wish they had a five-door. The market in Europe is huge, but it’s pointless to do one off this platform.”
So it has to wait until MINI refreshes the current platform. A five-door, and perhaps a more conventional sedan-like model, are expected to follow a year or so later, well-placed sources suggest.
Other changes will also occur under the hood of the next MINI. For the initial car’s powertrain, BMW swallowed hard and turned to its erstwhile rival, DaimlerChrysler. Now BMW is developing an engine of its own for the second-generation lineup.
MINI has clearly found a niche, BMW officials realize, but it is one that will require careful nurturing if it’s to grow. The real test is yet to come.