BMW is the world’s leading producer of premium and luxury automobiles and motorcycles, as well as provider of premium financial and mobility services. It has 31 production facilities in 15 countries and has a global sales network in over 140 countries. During 2022, the group sold more than 2.4 million passenger vehicles and over 202,000 motorcycles across the world. BMW was established in the year 1916 and is headquartered in Munich, Bavaria, Germany.
The company principally operates in three separate segments, namely, Automotive, Motorcycles and Financial Services segment. The Automotive segment focuses on the development, manufacturing, and distribution of automobiles powered with all-electric drive systems, plug-in hybrid systems and highly efficient combustion engines, and also spare parts, accessories and mobility services under the BMW, MINI and Rolls-Royce brands.
Its Motorcycles segment develops and sells motorcycles as well as spare parts and accessories. Additionally, its Financial Services segment is involved in leasing, retail and dealership financing, multi-brand fleet business, customer deposit business and insurance activities.
Here are some of the statistics of BMW
- Founded on – 1916
- Headquarters – Munich, Bavaria
- Country – Germany
- Industry – Automotive
- Chairman – Norbert Reithofer
- Revenue – €142,610 million as of December 31, 2022
- Profit – €18,582 million as of December 31, 2022
- Automotive Production – 2,382,305 units in 2022
- Automotive Delivered – 2,399,632 units in 2022
- Motorcycles Production – 215,932 units in 2022
- Motorcycles Delivered – 202,895 units in 2022
- Number of employees – 149,475 employees in 2022
BMW Strengths
1. High Brand Value
One of the greatest strength of BMW is its brand recognition. As of 2022, it was the world’s most valuable automaker, which was ranked at 76th place based on their value. During 2022, the brand was valued at approximately $27.6 billion, which is an increase of 11% over 2021.
BMW has built a reputation for producing top-of-the-line vehicles, which has led to high customer loyalty and brand recognition. This gives the company a competitive edge over other players in the market.
2. Global Presence
The global presence helps the brand to reduce exposure to economic and political risks in any one market. BMW has 31 production facilities in 15 countries and has a global sales network in over 140 countries.
During fiscal year 2022, the Asian region accounted for 38.3% of its total revenues, followed by Europe (36.1%), Americas (23.6%), and Other regions (2%). Diversified global operations helps the brand to reach a wide customer base, as well as tap into new markets and revenue streams.
3. Financial Strength
BMW’s revenues has seen a tremendous growth during 2022. The company increased its revenues from €111,239 million in 2021 to €142,610 million during the year 2022, representing an increase of 28.2% over 2021. This increase is principally due to the revenue impact of fully consolidating BMW Brilliance.
Despite the decrease in sales volume, the revenues increased due to favourable pricing and product mix effects as well as the higher volume of business with spare parts and accessories. As a result, BMW also saw an increase in its net profit from €12,463 million in 2021 to €18,582 million in 2022. Its strong financial performance helps enhance investors’ confidence and improve the growth prospects.
4. Strong Research and Development Capabilities
BMW invests heavily in research and development (R&D) and continually improves its technology to stay ahead of competitors. The company has R&D facilities in 17 countries. In 2022, BMW spent €6,624 million on its R&D, which as a percentage of revenue, stood at 4.6%.
A significant proportion of its R&D expenses was related to new vehicle models, as well as the development of digital products. Extensive R&D activities allow the company to gain a competitive advantage and augment its product portfolio, helping it gain a large market share.
5. Diverse Product Portfolio
BMW remained the global leader in the premium segment with its strong product portfolio and sales of more than two million vehicles. The company has a diversified product portfolio ranging from luxury cars to motorcycles. It operates in three separate segments, namely, Automotive, Motorcycles and Financial Services segment.
The Automotive segment focuses on the development, manufacturing, and distribution of automobiles powered with all-electric drive systems, plug-in hybrid systems and highly efficient combustion engines, and also spare parts, accessories and mobility services under the BMW, MINI and Rolls-Royce brands. Its Motorcycles segment develops and sells motorcycles as well as spare parts and accessories.
Additionally, its Financial Services segment is involved in leasing, retail and dealership financing, multi-brand fleet business, customer deposit business and insurance activities.
The BMW brand provides various models, including sedans, SUVs, sports cars, and electric vehicles, catering to multiple customer segments and maintaining a solid market presence.
BMW Weaknesses
1. Litigations
Involvement in legal matters not only affects its brand image but also increases the financial burden on the organization. In the recent past, the company has legal and regulatory proceedings, including claims or counterclaims for damages arising from the use of products or services, as well as claims relating to intellectual property matters, employment matters, tax matters, commercial disputes, breach of contract claims, competition and sales and trading practices, environmental matters, personal injury, insurance, and so on. Many of BMW Group subsidiaries are facing a number of diesel emissions-related court claims in England.
2. High Pricing Strategy
As a luxury carmaker, BMW has positioned itself to a specific, and limited, class of consumers. Its vehicles are highly priced than the traditional gasoline-powered vehicles. This ultimately limits the company to cater to high-end consumers.
The high prices of products attract middle- and high-income customers only and prevents customers from low-income brackets from easily purchasing its products. The high-end segment represents only a minority of the global market, which is regarded as a key weakness of the company.
3. Product Recalls
A high number of recalls could have a negative impact on the company’s brand reputation. It can also lead to additional costs. Recently, regulatory authorities have ordered the company to recall various vehicle models in conjunction with airbags supplied by the Takata group of companies.
BMW Opportunities
1. Strategic Alliances
Strategic alliances can help BMW access new markets, technologies, and expertise, driving innovation and growth. In January 2023, the company expanded its existing joint development partnership with Solid Power.
The new research and development license intends to adopt Solid Power’s cell pilot production lines at its own Cell Manufacturing Competence Centre. In March 2022, BMW acquired the ALPINA brand, which has strengthened its luxury segment product range.
2. Growing Electric Vehicle Market
The electric vehicle (EV) market is expected to grow significantly in the coming years, driven by government incentives, environmental regulations, and changing consumer preferences.
According to Statista, the global EV market is expected to grow by 17.02% (CAGR 2023-2027), resulting in a market value of $858 billion by 2027.’ The group delivered a total of 215,752 all-electric vehicles to customers, as compared to 103,854 units in 2021. This presents a significant opportunity for BMW to expand its market share and increase sales.
3. Drivetrain Technologies
When developing drivetrain technologies, BMW focuses on the needs of its customers across the world. The company is constantly developing existing drivetrain technologies in the interests of efficiency, decarbonisation and resource conservation. Additionally, it continues to research new drivetrain technologies with the ultimate aim of developing them for series production.
4. Product Launches
BMW has launched a number of new products during 2022. The new products launched during the year included the new BMW 2 Series Active Tourer, the model revisions of the BMW X7?2, the BMW 3 Series Sedan and the BMW 3 Series Touring, the new version of the BMW Z4 Roadster, the fully electric BMW i7?2, and the new fully electric BMW iX1?2. The launch of new products provides opportunities for the company to improve its market share.
BMW Threats
1. Regulatory Changes
Changes in regulations related to emissions, safety standards, or trade policies could impact the brand’s business. Non-compliance by the company with applicable laws and regulations or failure to maintain, renew or obtain necessary permits and licenses could hamper the results of its operations and financial performance.
2. Fierce Competition
The brand operates in a highly competitive market. Its major competitors include Mercedes, Tesla, Lexus, Audi, Toyota, Volvo, Ford, General Motors and many others. Competitive pressures can lead to high operating costs and reduced profit margins.
The competitors may have established brands, larger resources, and lower costs, which could make it more difficult for BMW to maintain its market share.
3. Impact of the Pandemic
The coronavirus (COVID-19) is not only a global public health emergency but also a cause of a number of regional and global economic disruption. The COVID-19 pandemic has had an adverse impact on its business and operations.
The recent shutdowns in parts of China as the government pursues a strategy of containing the spread of COVID-19 has adversely impacted the company’s supply chains.
4. Over-dependency on Suppliers
BMW is highly dependent on a network of suppliers and partners to procure raw materials needed in its production. Fluctuations in prices of commodities, raw materials and energy poses risk for the automotive segment. Also, intense competition for specific raw materials required in the introduction of new technologies can lead to increasing costs or possible shortages in the supply chain.
Thus, rising raw-material prices may have a negative impact on the profit margins of the vehicles sold and thus lead to lower earnings in the respective segment. Any disruptions to the supply chain, such as shortages of raw materials or components, could impact the company’s production and profitability.
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