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As for the mag article Brightness pointed out all the guy was doing was poking fun at folks who buy stature. Replace BMW's name and the pun on engines with MB, Lexus , Audi or if we were talking cameras put Nikon, Leica or Canon in there instead
That does not change the fact that what he said is unimportant.
LJ I do know that you know the answer to your own question. And the reason I know this is because you yourself have mentioned many times the importance of having the financial resources and economies of scale of a large auto company. Well it so happens that BMW wants to grow big enough to accomplish those things. BMW is growing bigger in terms of its financial resources for R & D and Capital expenditures. BMW's goal of introducing 30 new models within three years is all about growing bigger and more competitive in its industry.
Up to now they've accomplished their desired growth with competitive lease deals and at the same time they're earning a profit on those lease deals.
There is something wrong with sales growth and profit losses. There is something wrong with stagnant sales and profit losses. But what is wrong with with BMW 's profitable growth? I dont know? But you do mention the word risk.
The risk? Ofcourse there is a risk--what business do you know outside of government is non-risky. But so far BMW is growing in a profitable manner and that IMO is the best kind of growth. What should not be forgotten is that while leases are profitable BMW still sells most their cars to purchasers (58 percent).
Google and the most successful companies on earth today are confronted with their own risks. Risk is not a BMW distinction. There is not a single non-exotic auto maker that does not offer generous purchase incentives or "lease deals with inflated residauls. NONE! So yes I repeat risk is not a BMW distinction.
Not sure if this applied only to 3 series, but the top five brands for best retained value for four year old vehicles in Canada are:
Toyota (57.5 per cent)
Honda (52.6 per cent)
Mazda (45.3 per cent)
Acura and Audi (tied at 44.4 per cent)
The industry average was 37.7 per cent.
The top-five light-truck brands for retained value:
Honda (49.9 per cent)
Acura (49.7 per cent)
Lexus (48.2 per cent)
Toyota (47.9 per cent)
Nissan (47 per cent)
Industry average: 37.4 per cent.
See the article here link title
BMW, MB and Lex did not make the list for used cars.
Risk - there's a big difference here. Of course every business has risk. But in this case the risk BMW is taking is a voluntary one that doesn't need to be there if you followed industry norms instead. That's exactly what all the analysts that follow the company were saying in March and it's why they were not impressed with BMW's unit sales gain in February. The aggressive pricing and conservative risk sales approach is to go lower than industry norm on lease residuals. It's also an indication of pricing power. Pricing power and controlled costs are exactly what analysts are looking for.
iDrive or COMAND looks good yes but in actual operation makes you want to rip your hair out. Top gear tested the S550 and they literally had 12 steps to change the radio station using COMAND. That is if you memorize the menu order and layout to know where to go. Not to mention the lag b/t each menu as it loads.
Any comments from MB owners or afficiandos?
Is the norm really a 58 percent residual?
And even if that is the case a 58 percent residual on a Taurus and a higher residual on a BMW 3 series will equate to substantial losses for Ford and great profits for BMW. Why? Because of the substantial differences in their Resale values. So comparing residuals to the norm is not necessarily the best way in determing an automaker's profits in leasing.
So why is BMW leaving money on the table with inflated residuals?
Profitable sales growth (please note that I said profitable not unprofitable). BMW does not want to grow by taking over VW. Nor does it want to be niche player selling cars at undiscounted prices because that would mean a bigger automaker would takeover BMW. BMW wants profitable growth and to grow without acquistions. IMO that is the best kind of growth even if it means good lease deals for the consumer especially when BMW itself is profiting from such deals. It is a Win-win situation.
2) That's exactly what all the analysts that follow the company were saying in March and it's why they were not impressed with BMW's unit sales gain in February
The analysts opinions focused on two specific issues related to BMW incentive:
The X5--which happens to be in an industry segment where incentives are the name of the game (even for the spanking new Toyota Tundra model)
The BMW 7 Series---a dated model that happens to be among BMW least successful models.
Name me a company and I will name you a sceptical analyst. It is their job to be sceptical and not cheerleaders (although that is not 100 percent true even during our post-Worldcom era).
3) Pricing power and controlled costs are exactly what analysts are looking for.
Precisely right and that is what makes BMW such a profiable company. BMW has enormous pricing power compared to almost every other luxury marque. Have you ever cross shopped a BMW with equivalent options to a competitor? BMW earns heavy gravy with their pricey options and that results from their pricing power. Even after incentives BMWs are in most cases pricier.
I guess we Canadians are more frugal than Americans. The auto lux market on a per capita basis in Canada is a fraction of what it is in the USA.
And many frugal Canadians dont want to be stuck paying higher out of warranty expenses for a lux mobile than they would with a mainstream Honda.
Mercedes Evaluates Driver Distraction
Imagine how distracting that must be?
What is really funny is that MB is researching ways to decrease driver distractibility by keeping their eyes on the road.
Funny how MB has not yet reached the conclusion yet that chucking out the COMMAND systems from their cars would be the best way to reduce driver distractibility :confuse:
If you want a good laugh refer to the link above.
If you want to believe that - be my guest. But BMW, a niche player in a much much larger industry just became the first company I know of (based on your assessment, mine is totally different) - other than monoploies in special situations - that wants future risk and lower current profits. Again be my guest if you really believe that in your heart. None of it adds up or makes any sense to me.
BTW - the analyst complained about lease discounting thru high residuals. It was crystal clear in the asessments I read. I think 5 years of static profits (no growth at all really) amid big sales unit increases proves out that they are making zilch on what should be much higher margin incremental unit sales. But we differ completely here on everything so I'll leave it at that.
Did you say BMW profits??
Apparently you are a believer of German Accrued profits. But what you did overlook is BMW's current higher margins and higher Returns on Capital for 2006.
And even if you did not overlook the 2006 figures it would not make one single bit of a difference.
Why?
I've news for you ---nobody and I repeat nobody uses German profits in any form of analysis since it is known that German companies use humungous reserves and accruals to minimize profits.
Unlike USA and elsewhere Germany reports one set of figures for both the public and the tax man. Therefore they have an incentive to report lowball profit figures to minimize taxes. In other words BMW's real profits are likely to be far higher than their reported profits. That is why I've been focusing on free cash flow all this time.
other than monoploies in special situations - that wants future risk and lower current profits.
You've never ever heard of sacrificing margins for the sake of more sales volume? Well at least we agree on one thing and only one thing: We differ and we will leave it at that.
Similar to EBITDA?
How do financial analysts for the wire houses see BMW? How has BMWs stock done? Does the market think that their strategy is good?
Speaking of the 7 Series (someone in the above exchange thought it was a tired design), the resale values seem very high, higher than even the S Class and, surprisingly, not at all diminished by the horrible I Drive or abysmal reliability in the early years of the current body style.
The real question is, has the manufacturing of BMW and MB become so efficient that they can take that kind of hits at the financing end and still be profitable because the manufacturing cost is going down even faster than the shrinking per vehicle revenue that they are generating due to all those discounts (subsidized financing is just another way of discounting). I have my doubts about that.
EBITDA? I never look at those reported figures. Reported EBITDA figures are arbitrary in the sense that they can be caluculated differently by each company. I prefer to take figures and calculate them my own way (Free Cash Flows as I define it )versus someone else's way.
Also the TDA part of the EBITDA formula is problematical :
T-Taxes-what company doesnt pay taxes? None
A-Amortizations and D-Depreciation--how many companies do not have capital equipment and buildings? None.
Private Equity funds use EBITDA to value companies in order to see how they can maximize debt and minimize equity for an acquisition:
(Debt + Equity - Cash) /(EBITDA)
I am not in the pivate equity business of buying companies and financially restructuring them so I have little use of EBITDA as a valuation tool.
Nothing is better than looking at cash to cash on an annual change basis and adding back dividends, cap expnditures (but you need to be on guard for bad internal capitalization), and then adjusting for all one-time (or a series of money flows in or out) related to acquitions, divestuitures, stock buybacks or new issuances, bond redemptions,purchases etc. As well you want to look at major changes in accounts receivable and accrued liabilities. Bottom line - if profits are not backed up by cash - they are being manipulated. Best way to look at cash is over a 2 year or longer period.
BMW's cash changes leave a lot to be desired as Brightness so accurately points out. I've said before I hardly think the company is in trouble, but there strategy is revenue growth wihout profit grwoth and the hamster example is a good one. I honestly think the Quandts are positioning the company for sale. I've seen the actions and strategies they are following often enough to recognize them.
With these criteria in mind, it looks like I have little choices but looking at mini van or mini mini van since they offer rear (powered)sliding doors. I think the candidates will be Sienna, Odyssey or Mazda5. The 5 seems to have suspension issues according to my research on Edmund, but it drove very nice during my test drive yesterday.
If I ended up getting either the Sienna or the Odyssey then I may have parking issue since my garage can only accomodate one large and two small vehicles. Also, I would like to upgrade my GS into an LS460 in a year or two.
What should I do?
How about we try to respond to 2001gs430, "Luxury Lounge" #764, 10 Apr 2007 11:36 am which got lost in the food fight yesterday?
If you get a minivan, do you need a car like the LS?
A new GS, or similar car might be better.
Have you driven the minivans? They do NOT fit the criteria of car-like driveability IMO. However they seem like they can't be beat with regard to room. I considered a minivan but wound up with an Outback wagon. That was five years ago and I still have it. It's a compromise. Which Subi do you have and why are you getting rid of it?
1. length; it's just as long as a full size minivan; hence hard to park, and unwieldy in the garage;
2. reliability is a real question mark there;
3. no sliders;
4. interior space utilization is quite poor, especially compared to what the sibling company's Caravan does.
On the plus side, some of the lease deals on the R class are quite attractively priced (at least as of last month; there may have been the usual April price increases due to residual reduction and money factor raises; the usual mfr tap dance to soak the summer drivers this time of the year) . . . so it might be a place to hang out for a couple years until we have the competition arriving and making the whole segment much more interesting.
Just kidding, guys.
Their inline six is smooth as silk.
'06 Audi A3 2.0T DSG • '05 Audi S4 Cabriolet • '04 Lexus RX330
Good choice on LS460. It's just impossible to go wrong in that class of cars. I would like to buy my wife an S550 4Matic early next year. We were going to get an A8 this year, but there were some complications... and now she likes the S-Class better. Who am I to object?
'06 Audi A3 2.0T DSG • '05 Audi S4 Cabriolet • '04 Lexus RX330
I've read that for so many years concerning BMW's inline 6. Having experienced a 2006 330i and a 2007 335i, I just don't see what all the fuss is about. I don't find it particularly smooth. At least, not as smooth as all its praise would have someone think. It's no smoother than most of the V6s on the market of comparable displacement. In fact, I find Honda's 3L V6 in the Accord to be smoother than BMW's I6. The BMW, to me, is on par with Honda's 3.5L V6; another one that's not too particularly smooth.
You are correct about the minivan talk not belonging here. However, in my case, it will affect the decision on my lux mobile down the road, so please play along for a little bit...
If you get a minivan, do you need a car like the LS?
A new GS, or similar car might be better.
You are thinking exactly like me, but my wife already said she likes the new grandpa Lex (LS460) for our next lux ride. Personally, if we ended up getting a minivan, then I would prefer a real sporty car like an M3, RS4 or even some thing from Lexus.
Well, the Subi lease if up end of Sep, so there are about five months to find its replacement. I found the Mazda 5 is just about perfect given its role in our household, but I got real turned off when reading about its suspension issues in the forum. I do hope others will come out with comparable products soon.
Got the Impreza TS about four years ago. We love the car, but for some reasons that it's been a target for bad drivers. It got hit twice while moving and numerous other counts while parked. Just for comparison, my GS got dinged once in a mall parking lot over the same 4 years.
The reason that I even consider minivans is that my client may want to send me to their new project in Greenwich CT for a little while, and that would mean some road trips with the wife and our 1 year old daughter between Toronto and Greenwich.
Not really the place to talk about minivans...
2001gs430 responded:
You are correct about the minivan talk not belonging here.
Just to clarify, this thread was started within the intention of including any conversation with the realm of decency and civility. It is a general meeting place for those who are inclined to particpate in the luxury-car forums but not exclusive. It is modeled in the ilk of the "Subaru Crew Cafe" thread which states in its masthead "This is the place for Crew members to kick back, relax, and talk about...whatever!" This is the spirit of the thread, so your conversation about minivans is welcomed as far as I am concerned and as long as Edmunds agrees. It appears that they have.
This is a friendly, digression-free thread. Tisk tisk for it having to be padlocked recently. ;-)
Admittedly, I have no experience with comparably sized Honda or Nissan V-6s. But I have spent much time driving Toyota 3 & 3.5 liter V-6s, & they're not nearly as pleasing to the senses.
As far as the 330i being "enormously satisfying," that's debatable. I was left wanting. However, the 335i was quite satisfying!
I was mainly responsible for that padlock incident. I owe you, Pat and all forum members an apology for what happened.
My work involves spending a lot of time on the web and unfortuantely I do digress too much of my work and leisure time in forums like this. And that is not an excuse for what happened. I can assure you that no future padlocks will happen on account of me and please I dont want anyone to respond to this post since I think enough has already been said.
You can fix it w/ balance shaftes and the like, but an I6 is perfectly balanced. Plus torque output is easier to achieve.
I'd find it pretty hard to believe any V6 could match a Bimmer six of similar displacement.
2001 BMW 330ci/E46, 2008 BMW 335i conv/E93
I think BMW and Porsche could put up a fair fight for "best six-cylinder engine," and although Porsche wins in my book, BMW is not far behind. There are also the VQ V6s from Nisfiniti, and the VW/Audi 3.6L FSI isn't half-bad. Just my two cents.
'06 Audi A3 2.0T DSG • '05 Audi S4 Cabriolet • '04 Lexus RX330
Sienna is the only minivan available with AWD I believe. Also, we don't believe in flying with our daughter being so young, not to mention the amount of stuffs that would have to be lugged along.
Don't get me started with the nanny thing. You are so right about first time mother and getting a nanny. Just last week, I went to Greenwich to scout out the location, so I set her up with a very nice older nanny from the Far East for a try out. She would help with the baby, cook, clean and do all house chores, all for 2 weeks worth of my pay per year. The week went by beautifully, but as soon as I came back, my wife claimed that she no longer want to have a nanny and the biggest single reason she gave was exactly what you said :confuse:
In any case, I have been all over the places with respect to the choices for the subi's replacement.
Nissan is going to push the VQ37HR-TT into the 450hp range. No production BMW inline has ever gone even close to that. Will it be Nissan v. Porsche?
If BMW had wanted to make the new M3 with an inline six, there's not a doubt in my mind that they would've taken the 335i's engine and tuned it to 400-450hp. However, they have the super-slick, M5-derived V8 instead. Neither are bad choices.
But yes, many magazines will inevitably compare the new Skyline to the 911 Turbo. I don't really think they're direct competitors, though. They may end up having similar performance numbers (although it would take a ton of effort on Nissan's part to get the Skyline to go from 0-60mph in under four seconds, as the Turbo does), but the experience of owning the Porsche contrasts markedly with that of owning the Nissan.
'06 Audi A3 2.0T • '05 Audi S4 Cabriolet • '04 Lexus RX330