BMW Going on the Offensive

The company had earned revenues of €42.28 billion,³ a 9.9% increase over the previous year. The net profit had also increased by 8.3% to €2.02 billion, exceeding the €2 billion mark for the first time in its history. The year 2002 had clearly been one of the most successful for the BMW Group. Company sources attributed this record performance largely to the restructuring exercise undertaken in mid-2000. As part of this exercise, BMW had sold off its Rover and Land Rover businesses. The company had also implemented a product offensive strategy, under which it planned to launch new products in rapid succession (in the premium segment of the passenger car market, where it already was one of the leading players).

BMW's objective was to establish itself in every sub-segment of the premium segment, from entry level to the top level. According to BMW sources, the product offensive strategy was aimed at increasing the sales of BMW cars to over 1.3 million by 2006, from 950,000 in early 2003.

Given the company's strong research and development (R&D) infrastructure, production facilities, efficient workforce, extensive dealer network, and above all, the renewed vigor, analysts expected it to pose a serious threat to other players like Toyota, General Motors (GM), DaimlerChrysler and Porsche (Refer Exhibit I for a brief note on the automobile industry's premium segment).