Reports out of Munich are that BMW and Mercedes will be getting very cozy when it comes to cooperation. Earlier this year, Mercedes said "nein" to some sort of tie-up with BMW, even as Daimler was eying MINI motors for its upcoming A- and B-Class cars. Unnamed sources, though, have told the Financial Times Deutschland that BMW and Mercedes are not only looking at cooperating on engines, but they could also be open to developing assemblies like "axles, steering gear or drive systems."BMW is being driven by the desire to cut costs. One can only assume that Mercedes, for all of its protestations, has the same thing in mind. Every carmaker is coming out with a raft of smaller cars to serve multiple purposes, among them: meet CO2 emissions and CAFE standards, put on a green face on for the public, and, of course, increase volume by selling more inexpensive vehicles.
While we're sure consumers would like to imagine each maker bringing its own technology -- and specifically, intangible brand feel -- to its vehicles, the business case cries out for closer cooperation for economies of scale. We aren't sure yet how BMW and Mercedes will be joining up, but we're pretty sure that they'll be doing so in some substantial way soon enough.
[Source: Bloomberg]
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Reader Comments (Page 1 of 1)
MixiM @ Dec 29th 2007 8:54AM
This isn't good, it will dampen the competition between the makes and thus easying on the technical evolution... And most of all slowly strip away each of the two brands identity.
adrian @ Dec 29th 2007 11:56AM
It's good for business. Meeting all the new standards is going to cost some serious R&D money, it's better to split the costs with a partner. Car companies over the years have joined forces on technical issues, and for the most part it's done them no harm in the long run.
Rocketboy @ Dec 29th 2007 12:19PM
I hope this isn't an indication that the shark tank is being filled up. BMW not that long ago prided itself on being it's own brand. Now, not so much.
3seriesisking @ Dec 29th 2007 2:31PM
Agreed. They still air commercials stating that they are their own brand and that it is BMW making BMW cars. I really hope that we don't see a significant partnership with Merc. I do understand the business aspect end of the deal and the "benefits" it would likely bring but I really don't want to see BMW depart from their identity any more. Keep your fingers crossed they don't go down the wrong road.
dpb! @ Dec 29th 2007 2:19PM
I agree this is not a good idea! BMWs are only BMWs and now they will have to design based on Mercd now. Lame. I think people have shown they are willing to pay more for a mercd vs a cheaper audi/infiniti/etc.
rmc @ Dec 30th 2007 4:00PM
Why not Merc base their vehicles on BMW designs - that sounds like a better idea.
j_diesel @ Dec 29th 2007 5:45PM
perhaps they will use smart car as the company to co-operate on. allow smart to be owned 50/50 and have it's own ideas and cars and be able to draw on the r&d from both parent companies. that way both companies have a smaller car available which is servicable at either a bmw or m-b dealership. it also allows both companies to be arm's length away from the products and still claim they only build bmw or benz.
Brandon @ Dec 29th 2007 5:58PM
This all comes down to aligning the economies with scale, and how the cost of production is ever increasing, the margins for proffit are ever decreasing.
I don't think ventures like this will spawn BMW's with a Merc feel or visa versa, I believe it will play out much like it has in the area of consumer electronics. Years back, consumers would be lead to spend their money on a certain electronics maker because of what their product "stood for" in the market, whether it be sound quality, type of production, materials and the use of technology. Now in that market what we're seeing is the situation where almost all consumer electronics are assembled using single brand components made from large producers. The names, values and distinctions of each brand are there, but the components of which they use are all essentially the same now. This is why we see such a vast drop in the price of high end electronics only years after they're brought to the market as something new.
Which leads me to conclude that most of the technology sharing that will take place in such a venture with BMW and Mercedes will be something of the same value, whereby each brand will keep its core values that its had for the gennerations before, but the hidden and not so important for sales components will be the offspring of the business deal.
Overall I think it could work out well for both brands, as they're each equally impressive with the development of new vehicle technologies. If they keep it smart (which I can only assume will happen) each brand will not have to worry about diluting their respective images.
Rocketboy @ Dec 31st 2007 9:29AM
I hope that you're right. I don't think that BMW would do something that would sully their brand. They learned a big lesson from the Rover fiasco (although they did get the MINI from the deal, and even that was a touch and go situation at one point), and I doubt that they would make the same (or even a worse) mistake again. Let's hope it's on the level of the engine collaboration that they've been doing with the MINI since the onset. Work on something that's rather low-margin and low numbers, with someone else to make it a more profitable, and increase the amount of know-how that goes into the component.
Reality Check @ Dec 29th 2007 6:41PM
Maybe BMW will get the shinny interior pieces from Mercedes and Mercedes can get the extra fat in the butt of the new 1 series... We will be seeing a lot more of this and I hope that our three will reduce costs like Ford and GM did with the six speed transmission. The only way to beat imports is to do what they are doing share costs and create decent long lasting parts. The new Hybrid from GM, Chrysler, Mercedes and BMW all got together to reduce costs... Thank Allysen transmission for the know how!