Author Archives: Bruce Nunnally

Understanding BMW sales/profits

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I am still fascinated by the quoted statement from BMW in the LA Times that 50% of their profits come from the 5-Series.

Here is a chart of BMW 2009 Sales from back in January 2010:

BMW sold 40,109 5-Series vehicles, of a total of 196,502 vehicles.  For the moment let’s assume the BMW Marketeers excluded Mini sales from their figures.

Normally I would have expected the profit rate on the SUVs was very high, but BMW sold almost the same number of SUVs as 5-Series sales.  So their profit margin on the SUVs are much lower than the 5-Series?  The profit level on the 3-Series and 1-Series are lower as well?

Certainly because the price tag of the vehicles differs sharply:

3-Series: $33-45K

5-Series: $45K-$63K

SUVs: $39K-$67K

So something seems odd here, if the SUVs have the same price range as the 5-Series but are much less profitable?  It may have to do with pedestrian issues, such as the 5-Series is an older model and so has already paid off its tooling costs (a new model is on the way now).

Or it could simply have been the type of thing Marketing people say to emphasize that BMW 5-Series Buyers don’t mind spending a lot of money on accessories.

One final theory — perhaps BMW’s profits on the 5-Series and the SUV are both healthy, and their profit margin on the 1-Series and 3-Series are near 0?  That would fit the quote, and fit the pricing.  Still is worthwhile to HAVE the 1-Series and 3-Series in the mix, as they drive traffic.  But even at the high (to me) 3-Series prices and healthy sales BMW may not be making much money on them?

Cadillac CTS an American Sports Sedan

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In the 90s when Cadillac was marketing the Cadillac Seville STS alongside the Cadillac Eldorado ETC, magazines at the time would often compare/contrast the two.  Besides the obvious fact that the STS had 4 doors and the ETC had 2 doors, they also were targeted at somewhat different audiences.

The ETC was viewed as a classically American personal luxury vehicle.  It had more American touches — more chrome, more color.

The STS was described as a more European luxury vehicle.  Less chrome, more mono-color design cues, more muted styling.

When you look at the Cadillac CTS of today, it uses a variety of chrome accents — on the door handles, the seat back, the trunk — to recall the classic Cadillacs of yesterday. Certainly it has unusual, look at me styling.  The first generation CTS styling was inspired by the Stealth Fighter (F-117 Nighthawk).  That aircraft had sharp creases and angled surfaces as a way to minimize radar cross-section.  The current, second generation CTS is an evolution of the original design, merging in elements of the Cadillac Sixteen look and styling.

I don’t think anyone would claim the Cadillac CTS is not ‘American’ enough.  I think it instantly suggests to most knowledgeable viewers visually that it is an American car.   Certainly in the V-Series you also get the classic American approach to muscle — there is no replacement for displacement.  With the LSA Supercharged 6.2L V8 making 556 hp it is hard to argue with the ‘too much is just enough’ approach to power plants.  In today’s market however, the base 3L V6 with 270 hp and the Performance/Premium CTS with 304 hp seem well heeled, until you consider the competition.  Many of the competitors in this market sport 330 hp – 385 hp powerplants with similar fuel economy to the CTS V6 Sedans.

Clearly it is time for Cadillac to task GM Powertrain to step up their game.  Even a 3.6L with the same tuning and efficiency of the current 3.0L V6 would make 324 hp.   So I don’t think it is a problem that the engines are not capable.  If Cadillac can’t get the power needed from the 3.6L then send in the Supercharged 3.6L, or offer the 6.2L LS3 V8 as an option.  The high feature 3.6L V6 likely costs MORE for Cadillac and GM than the LS3 V8 does to produce due to the higher feature set of the V6.   So my personal favorite best of both worlds would be to offer the LS3 V8 as a $2K SAVINGS off the current base CTS — a CTS V8 for less money lol.

American Luxury cars — Cadillacs — historically bring MORE power than needed.  The current CTS V6 powerplants are adequate.  Adequate is not enough in this class.  Luxury Performance cars need plentiful power, and Cadillacs should have class-leading horsepower.  Bring it, Cadillac!

Recaro Seats? Yes please

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Beginning in the 2009 Cadillac CTS-V Cadillac has offered Recaro sport seats as an option. This continues a trend of using ‘name brand’ equipment, such as Brembo brakes, in order to ensure quality, performance, and credibility in automotive reviews.

I think of Recaro seats as Porsche seats, but what automobiles does Recaro currently make seats for?  This list comes from the Recaro website:

  • Aston Martin DB9
  • Aston Martin V12 Vanquish
  • Aston Martin V8 Vantage
  • Audi TT
  • Audi TT RS
  • Chevrolet Cobalt SS
  • Ferrari 599 GTB Fiorano
  • Ford Focus RS
  • Ford Focus ST
  • Honda Accord Type-R
  • Honda Integra Type-R
  • Honda NSX Type-R
  • Honda Odyssey
  • Lamborghini Gallardo
  • Mitsubishi Evo IX
  • Mitsubishi Lancer Wagon
  • Mitsubishi ek-Sports RS
  • Opel Astra OPC
  • Opel Insignia OPC
  • Opel Zafira OPC
  • Porsche 911 GT3 (997)
  • Porsche Carrera GT
  • Renault Clio „Renault Sport“
  • Renault Mégane Sport
  • Saturn Ion Redline
  • Suzuki Kei-Works
  • Suzuki Lapin
  • VW Golf V GTI
  • VW Golf V R32
  • VW Golf VI R

The Cadillac CTS Recaro Seats have gotten surprisingly mixed reviews — not uniformly positive.  I believe that this is partially due to lack of familiarity with this type of seat.  Owners who drive their Cadillac are more likely to appreciate the support provided:

Cadillac CTS Recaro Seats

The Recaro Seats as offered by Cadillac appear to be similar to the Recaro Style + Style Topline model in the Recaro Brochure.

Recaro Seat Features

The Recaro Company offers the following history (more available here):

The success story of the present RECARO company began in 1906 in Stuttgart, as the 32-year old saddler master Wilhelm Reutter founded the company “Reutter, Wilhelm, Saddler. Spezialitat: Luxus- und Motorwagen, englische Geschirre” (Specialities: Luxury and Motor Vehicles, English Ware). Reutter quickly made a name for itself in the up-and-coming automobile industry which was largely positioned in Stuttgart: Bosch, Maybach and Daimler were the big names which wrote history and laid the building blocks for the present location of mobility, Stuttgart.

The foundation for the present company was laid in 1963, as RECARO was formed as a play on words – Reutter and CAROsserien (coaches). The first RECARO sport seat was introduced in 1965, and in motor racing, the company quickly became a recognized brand name.

I applaud Cadillac for offering Recaro seats as an option, and I am glad to see the Recaro seat option available on the CTS Sedan as well as the CTS-V Series.