BMW/Mercedes Mull Small Car Partnership?

Sections: Rumor Jul 5th, 2007 31 Comments

Hot off the presses: it looks like BMW’s desire to share MINI development costs and Mercedes need for a cheaper A Class may lead to a shocking future partnership. Auto Bild is reporting this morning that the two rivals are seriously considering a partnership to help defray development costs of the new small cars in an effort to make them more profitable. Here’s an excerpt from Reuters via AutoBilde:

In July, the two companies are expected to make a decision on whether to build the next generation Mercedes A-Class on BMW’s Mini platform, Auto Bild said in its forthcoming Friday edition without citing sources.

Heavy cost pressure means Mini runs the risk of losing money should its Oxford, England, plant not run at full capacity, so parent BMW is considering finding a partner.

Discussions could include Honda (7267.T) and existing partner PSA (PEUP.PA), and Mercedes, its arch-rival, as well.

Mercedes for its part planned on building the next A-Class in 2012 on a platform to be developed jointly with Chrysler, but these plans have been dropped after parent DaimlerChrysler’s disposal of its majority stake in the loss-making U.S. carmaker.

BMW’s sales and marketing head, Michael Ganal, suggested early last month in an interview with German business magazine WirtschaftsWoche expanding its current cooperation with Mercedes, which develops hybrid powertrains, into other fields as well.

You can read more below:

[ BMW, Mercedes mull subcompact partnership ] Reuters

[ Neue A-Klasse auf Mini-Basis? ] Auto Bild (German)

MF Analysis: We’ve known for sometime that BMW’s very concerned about the long term profitability of the MINI with current engineering costs, plant capacities and currency values. In fact we’ve heard that, while the new car is easier to produce, it’s not necessarily any cheaper than the previous to build. And just last week we heard from Dr. Kay Segler (MINI Brand VP) that MINI doesn’t want to simply sell more to make the car profitable. So the solution would seemingly be either to cheapen the car or partner with another company to reduce development costs.

What could this mean for future MINIs? While we don’t know how this could affect the end product, you can be sure BMW will guard MINI’s core brand attributes (go-kart like handling and unique design) very closely. After all, if this partnership happens, it would almost surely be at a component level not seen or felt by the end consumer.

Written By: MF Staff

Radley

What the heck?
korby

Mercedes did such a good job with Chrysler…? Honda would not be bad,they helped out Saturn without being heavy handed.
Nigel

We are witnessing the Ãƒâ€¹conoboxiation”of the MINI platform. Unfortunately, the only way MINI will continue to be profitable is by further diluting the platform for more mundane cars and increasing production.

We saw this coming.

-Nigel
rkw

It would be so weird. Imagine potentially a 5-door Clubman that drives like a MINI but looks like any generic hatchback, inside and out. No dinner plate on the dash! MINI remains an expensive car to manufacture and my guess is that it won’t meet Mercedes’ cost objectives.
http://www.motoringfile.com/ Gabe

It would be so weird. Imagine potentially a 5-door Clubman that drives like a MINI but looks like any generic hatchback, inside and out. No dinner plate on the dash! MINI remains an expensive car to manufacture and my guess is that it wonÃ¢â‚¬â„¢t meet MercedesÃ¢â‚¬â„¢ cost objectives.

I think you’re reading way too much into this. If this partnership happens, it would be at a component level not seen or felt by the end consumer.
>KÃƒÂ¢rK

OMG, Heaven forbid! MINI forbid! Sure, it all looks very cushdy, not to mention being a chufty badge for MINI “Merc buy our chassis!” but where would that leave the “bespoke” element that MINI owners are so proud of? I can hear it now: “MINI has the same chassis as the soppy A Class.” Not true, but such rumours cannot be good for business.

If they’re gonna do it, do it with Honda like the good ol’ days at Rover :)
Mytmini

Read what Lee Iacocca has to say about the Daimler Chrysler divorce in the August issue of Motor Trend. Very interesting!
lavardera

MT link?
CooperSharon

Wasn’t a small part of the reason BMW did away with the Tritec engine due to it being partly owned with Daimler-Chrysler? Why would they want to enter in a merger with Daimler again?
kellyp

http://www.leftlanenews.com/mercedes-to-drop-a-class.html
AJ

Why would BMW help Mercedes build a car that could be targeted at the 1 series?
JP

MINI and Mercedes both build autos in an economic environment that is based upon currencies that are well north of the U. S. dollar. Don’t expect that to change much in the coming years. This plus the need to continue to develop new platforms to compete in a world market makes sense to combine resources. BMW/MINI is an independent company and therefore competes against the likes of Toyota and a slew of other companies. In the end I would rather have MINI share development costs with Mercedes since both are quality auto companies.
goonery

What car makers are trying to do is to develop common parts of the cars they build in order to reduce costs of the massive differentiation of the currently ‘similar’ parts they all use. Take a car of similar size to a MINI made by just about every manufacturer as an example. Alternators, Fuel Tanks Clutches, Transmissions, wiring looms, ECU’s and so on are all different but are increasingly made by the same suppliers. The sheer difference in parts and the tooling or facilities used to cope with this diversity is the cost killer for many and this is where collaboration would pay off. Imagine one alternator design supplied to 10 majors instead of 10 different ones which is the case now, the cost per part would probably decrease by something like 50%, now multiply that by all the other parts that are under the skin, and you can see that enormous savings can be made. This would not only benefit the manufacturer, but the suppliers and the customer as well. The cars themselves would still look and perform differently because that is part of the branding and dynamics of the vehicle. Having common parts under the skin as it were would not mean that a Scion would look or drive like a MINI or anything else, but it would reduce complexity and cost at the end of the day. Its not a bad thing at all really.
Brian

Well said.
M. Dillon

In one of the RARE times,since finding this site,I found out about this story before Gabe. As far as I’m concern,I would feel better if BMW/MINI didn’t go this route.

The main reason is that on the 4th of July,I was checking out the world-wide launch of the Italian version of the MINI: The FIAT 500.(google: 500 wants you)

Anyway,after checking out the site,I then search the ‘net for news,regarding the FIAT 500;and found out that the individual who designed the modern MINI,is the individual who designed this car.

In closing,I think that BMW/MINI should pair up with FIAT simply because each company has small,hip,funky cars that if done/marketed correctly,would indeed compliment each other.

Besides,I think that the FIAT 500 would silence the critics who state that FIAT is not known as reliable if it was built on a MINI platform,than on the Ford Ka platform.
Vanwall

Getting into bed with any automaker usually ends up with one of the parties getting, well, you know, and you just want to make sure you’re on the right side of that equation when the honeymoon is over. I wouldn’t mind D-B adding a little class to their small car by using MINI bits, tho, they seem like a reputable outfit.
goonery

The Fiat 500 is a fair example of collaborating sharing the Ford Ka floorpan, but thats pretty much where it ends unfortunately. Nice to see that Fiat’s young management team have seen the light though and are producing a range of cars that look good and drive well. Imitation is a good thing and the design team have taken a lot of MINI attributes into consideration with the 500. It will get a lot of customers as it’s funky, different and relatively inexpensive. The only problem I see with it is that it appears to be built to a price point which may affect longterm durability. But they say they want it to be the Ipod of cars so I guess it’s expendable. The worrying thing is that the ICE set up is designed in partnership with Microsoft. Expect plenty of unexplained crashes, patches and security updates :-o
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Greg W

It’s like sleeping with the enemy. I’ve said in a previous topic that I think R56 has become a BMW clone. The individual MINI as penned by Stephenson and Rover is being morphed into a BMW thus sharing most components except body shape. And if Bangle gets near it, look out. Why don’t they just let MINI be assembled in other markets like they do with BMW – China, South Africa, USA, Thailand, Malaysia, India – in CKD kit car form.
http://www.motoringfile.com/ Gabe

Greg – I don’t know how to say this anymore plainly. If BMW didn’t have Chris Bangle as design director, the R50, R53 or R56 wouldn’t look the way they do today. Or to put it even more simply, Bangle did get near your car. He actually framed the design parameters and approved it.
jarrett

oh well the rebirth of the tritec engine!
goonery

Unfortunately a Bangle is just a cheap wrist adornment, whereas a Bracelet has a bit more class !
goonery

A Stephenson on the other hand is more of a Rocket and has more impact :-)
Nigel

Gabe, you keep saying that “Thanks to Bangle, the R50/53 saw the light of day”. You still haven’t provided any backup proving these claims. In all the New MINI books I have read an internet sites I have not seen a single reference to Chris Bangle during the development of the R50.

Rather I’d say, thanks to Frank Stephenson, the MINI evolved into a design full of character and well ahead of its time.

I am going to keep hammering you on this one until you prove me wrong.
http://www.motoringfile.com/ Gabe

Gabe, you keep saying that “Thanks to Bangle, the R50/53 saw the light of day”.

I’ve never said that nor would I.

You still havenÃ¢â‚¬â„¢t provided any backup proving these claims. In all the New MINI books I have read an internet sites I have not seen a single reference to Chris Bangle during the development of the R50.

Frank – it seems odd that you’re asking for sources here. First off yes it has been mentioned here and there on the web and in print that Chris Bangle oversaw the final design process. Secondly; how about these sources… Gert Hildebrand and Frank Stephenson. Mr. Stephenson and I have talked for years now and he’s offered great insight on the car and on his more recent projects. My recent discussions with Mr. Hildebrand have also backed up what I’ve learned over the years. And if you didn’t know, Gert was head of MINI design while Frank was still there as well.

Rather IÃ¢â‚¬â„¢d say, thanks to Frank Stephenson, the MINI evolved into a design full of character and well ahead of its time.

I couldn’t agree more. Frank Stephenson shaped the exterior form language impeccably for the time. If you’ve been reading MF for all these years you’d know this is how I feel. Hell, go back and read my design review of the R56. Not everything is so white and black as you would believe. I’m a huge fan of the original new MINI and of Frank Stephenson’s work.
O(=^=)O Capn

What car makers are trying to do is to develop common parts of the cars they build in order to reduce costs of the massive differentiation of the currently Ã¢â‚¬â„¢similarÃ¢â‚¬â„¢ parts they all use.

On face value, I would go for this if it would be like Goonery says. However I do not believe that to be true.

Look at all of the Rebadge cars that have problems. For example, the Honda Passport is nothing but a Rebadge of the Nissan Pathfinder. Honda wanted in on the SUV market but didn’t want to develop a car. The Nissan was very reliable but the Honda wasn’t. Industrial sabatoge?
Nigel

Wrong, the Honda Passport was a rebadged Isuzu Rodeo. In turn the Isuzu Rodeo was rebadged for other GM divisions under the Holden, Chevrolet and Vauxhall brands.

Back in the 1990′s there was an agreement between Honda and GM (In which Isuzu was part of) to supply Honda V6 engines in exchange for mid and full size SUVs that Honda did not have at the time. Remember when Honda was a CAR company?

In 1997 Acura’s first ever full size SUV was a rebadged Isuzu Trooper. It was called the Acura SLX..ding! ding!
O(=^=)O Capn

You are right. But my point still stands.
http://mini2.co.za Timmee

oh. adverts in my RSS! icky.
lavardera

Autoblog reporting today deal is officially off:

http://www.www.autobloggreen.com/2007/07/08/daimlerchrysler-and-bmw-officially-not-working-on-a-class-follow/

And Frank – I’d really like to see you start your own Mini blog. You have a lot to say and that would be a better place to do it.
goonery

Well O(=^=)O Capn, I think you have missed my point, I’m not talking about rebadging complete models and neither in my opinion is the article. Witness again and be amazed as I describe the new R56 engine, which is co developed withe Peugeot, the Toyota/Renault collaboration on a car which is built in the same East European factory but is distictly different in its 3, yes 3 countem versions, The Fiat 500 sharing the Ford Ka floor pan, The Mazda which is like a Ford Focus under the skin but then again is nothing like a Focus to look at inside or out or in its driving characteristics, I could go on and on, but it would become boring. The collaboration you describe is a left over from the 1980′s and things have moved on a bit. Expect many more underpinning and components to be jointly designed and manufactured, but the days of just sticking a badge on a car and expecting customers to be fooled are over.

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