MINI/Mercedes Partnership Rumor Quashed

Well that’s that. Can’t say it was a huge suprise, though. I could have swallowed the purchase of Volvo, or some cooperation with that company to share tech and build small engines and components (as hinted a while back)… but Mecedes just seemed like too much of a stretch. Particularly after BMW seemed to make such an effort to sever the Chrysler Tritec connection. Rumors and speculation does keep life interesting, though.

Remember that BMW struck its Tritec partnership with Chrysler just before arch-rival Daimler-Benz bought out Chrysler. The Tritec was a good partnership for BMW (MINI), as it turned out. If Chrysler pre-acquisition was a good partner, is Chrysler post-spinoff a good partner again in some future project?

One significant problem BMW faces with the MINI right now is that most of the car is tied to the U.K. pound. Both the car itself and the engine are assembled in the U.K. That’s unfortunate economically, because in just 5 years the pound has gone from under 1.6 to the dollar to just over 2, more than 25% up. Same thing only more against the yen: from just over 180 yen per pound to now over 248. Those are the two big export markets for MINI. For reference comparison, the base price of the 2002 MINI Cooper, including destination charge, was US$16,850. For the 2007 MINI Cooper it’s US$18,700. That’s only an 11% increase in price in 5 years, so MINI is getting many fewer U.K. pounds from every sale in the U.S. And it’s a double impact because the 2002 had a Brazilian engine (the Tritec) rather than a U.K.-assembled engine. I realize MINI is trying to make up for the currency difference in other ways, especially by hiking the price of options and encouraging customers (somewhat successfully) to buy more options. Also, supposedly MINI has reduced its build costs somewhat (in U.K. pounds terms). But I’d guess that these effects are not full adjustment, and there’s simple inflation to worry about, too.

I don’t want to sound like MINI marketing, but for a U.K.-built car the MINI is quite the U.S. dollar deal right now.

Is there a role to play for Chrysler in helping to solve this currency problem?

The agreement would hae produced a doomed four-wheeled tritec indeed. Good thing the rumour was quashed. I lost valuable sleep.

I look forward to more “squishy” hearsy. ;)

Good,

I hate Mercedes

Their cars are overpriced and unreliable, yet the company who makes them is too arrogant to admit it.

After the screwing they did to Chrysler, thank God BMW is not going to work with them.