MUNICH -- BMW AG has enjoyed amazing growth and profitability, but the president and chief executive officer of its Canadian unit concedes there has been more to the company's success than good planning and execution.
"BMW has been lucky. You have to be a little lucky in life," Hendrik von Kuenheim says.
Von Kuenheim himself has enjoyed a bit of good fortune, although 13 consecutive years of increasing sales for BMW Canada also point to a certain level of skill and foresight.
In May, BMW Canada sold 2,106 vehicles, the company's best sales month to date and an increase of 2.8 per cent over the same month in 2003. Year-to-date, BMW Canada's automobile sales are up 3.2 per cent over the same period of time last year, with 7,441 vehicles sold.
After six years leading BMW's Canadian unit, there is now speculation the 44-year-old von Kuenheim may be headed for a posting with larger responsibilities. He shrugs off speculation about moving on, pointing to his wife and young children (six and eight years old) who love Canada.
"There are things in life more important than career; there is family," he says.
Still, given his own pedigree, it seems likely BMW AG has larger things planned for von Kuenheim.
His father, Eberhard von Kuenheim, 75, was recently inducted into the European Automotive Hall of Fame for his work in steering BMW from a small Bavarian manufacturer into a global player.
The elder von Kuenheim became CEO of BMW at 41 in 1970, when the company had just 23,000 employees. When he stepped down in 1993, that number had more than tripled to 71,000. BMW's annual revenue during that time jumped to 15-billion euros from 880-million euros.
After stepping down as CEO, Eberhard von Kuenheim went on to head the company's supervisory board, which is the equivalent of a North American board of directors. He stayed in that role until 1999. Even now, he remains a close adviser to the Quandt family, which has held a controlling interest in BMW since 1959.
Today, the luxury German auto maker employs about 100,000 people and in March, announced net 2003 earnings of 1.947-billion euros on revenue of 41.52-billion euros. Global sales in the first five months of 2004 rose 6.5 per cent from the same period the year before to 477,070 units. BMW expects several new models will make 2004 a banner year, perhaps the company's best ever.
The strategy BMW is pursuing -- with success -- was put in place more than 30 years ago by Eberhard von Kuenheim. Back in the 1950s and '60s, BMW sold a diverse and unfocused range of models, from the tiny 250-cc, one-door Isetta to the high-end V-8 BMW 507 sports car.
Eberhard, who was born of Prussian nobility and studied engineering in Stuttgart after serving in the Second World War, focused BMW on growth by building only high-quality, high-profit products, his son says.
The company refers to this as a "premium" strategy now.
"When he announced the strategy, people in the industry said, 'von Kuenheim has lost it now.' It was very controversial," says the younger von Kuenheim.
Not so today. The plan to grow without becoming a pure mass-production auto maker has focused BMW, kept it out of diversifying into the aerospace business or large trucks, as has been the case with rival DaimlerChrysler AG.
But there have been blips, such as in the 1990s when BMW lost billions on buying, failing to rebuild and then selling Britain's Rover.
"A clear example of how not to [take over a company]," von Kuenheim says. "When you acquire a company, you take massive, brutal control.
"You have to fire somebody to prove it. We did not do that."
But overall, the strategy has worked. Certainly, it has in Canada.
Von Kuenheim says BMW is aiming for a market share in this country of 2 per cent, which, at market levels of 1.7 million vehicles, would represent 34,000 automobiles or about double this year's projected sales.
The numbers add up to this: BMW Canada has been the fastest-growing subsidiary in the BMW Group and the No. 1 sales-volume premium-brand manufacturer in Canada. While BMW globally has done well, its Canadian unit has done better.
New BMW products should keep that momentum going. The auto maker is in the midst of juggling four launches in six months, the biggest deluge of product in its history.
BMW recently replaced the high-volume 5 Series and face-lifted the X5 sport-utility vehicle.
It also is launching the smaller X3 SUV and bringing out a new 6 Series coupe and convertible.
In the coming weeks, BMW will also introduce the new 1 Series to compete against the Audi A3 and Volkswagen Golf. BMW Canada will not sell the 1 Series this year, but von Kuenheim says it will come to Canada, perhaps in a year or so.
BMW's aim is to make the brand more affordable while reaching into even higher price segments, says Susan Jacobs, a New Jersey-based consultant who follows the luxury car market.
"Part of the product strategy is to maintain the appeal with the baby boomers at the top end and to broaden their appeal to the baby boom echo, households now under 25 years old," she says.
In Canada, the new products have been matched by new retailing efforts. One is what von Kuenheim calls, "the most spectacular retail automotive facility in the nation."
The six-storey, corporately-owned BMW store in downtown Toronto (Sunlight Park, off Eastern Avenue) is the company's flagship outlet in Canada.
Von Kuenheim says it cost $20-million to renovate the heritage building, but rivals and analysts suggest a higher figure. In any case, the massive dealership includes new and pre-owned vehicle showrooms, as well as a motorcycle showroom and service area with glass walls.
Whether von Kuenheim will remain in Canada long enough to prove out this pricey retailing concept is the subject of speculation he dismisses.
Yet with BMW in an expansion mode, it does not seem unreasonable to expect von Kuenheim will be moving on to a more senior posting -- perhaps even one day to the top of the company his father led for 30 years.
