Official: BMW to go front-drive

AFTER years of singing the virtues of its exclusively rear-wheel-drive cars, BMW has confirmed speculation it will produce a front-drive BMW model, based on the third-generation Mini platform.

Revealed by BMW chairman Norbert Reithofer at the company’s annual financial press conference in Munich on March 17, the news represents the third broken promise by the Bavarian brand in recent years, after vowing that it would not build a V8-powered M3 or turbocharged M models.

Dr Reithofer said the second-generation (F20) 1 Series – which will replace BMW’s smallest current model in 2011 – will continue to break the mainstream mould by being one of the world’s few small cars on a rear-drive chassis.

But he confirmed that BMW will also create a more direct rival for the likes of Audi’s A3 and the Mercedes-Benz A-class, which offer better interior packaging but inferior steering and handling compared to the 1 Series, by delivering a range of front and all-wheel-drive BMW-badged small cars.

The additional BMW model is widely expected to adopt the 0 Series nameplate and should be in addition to the all-electric ‘Megacity’ vehicle, which is being developed by BMW’s ‘Project i’ skunkworks and will debut under a “sub-brand” from BMW by the middle of this decade.

“In the future we will launch more Mini and BMW models and variants – also in the small-car segment,” said Dr Reithofer. “This segment is expected to grow further and we will take advantage of this opportunity.

“We are exploring the possibility of developing a joint architecture for the front-wheel and four-wheel-drive systems of these cars. In other words, there will be front-wheel drive BMWs in the smaller vehicle classes in the future.” European reports suggest BMW’s new shared platform, which should spawn the ‘0 Series’ in 2013 and the next Mini in 2014, is capable of underpinning vehicles measuring between 3.8 metres (slightly longer than the Mini hatch) and 4.3 metres – slightly shorter than the current 1 Series, which emerged in 2004.

According to reports from Europe, the new small model family could comprise up to 20 distinct derivatives – including replacements for both BMW’s current E81 three-door hatch (not sold here), E82 coupe, E87 five-door hatch and E88 convertible, plus Mini’s three-door Cooper hatch, five-door Clubman wagon, two-door Cabrio convertible and upcoming Countryman crossover.

While the move will help reduce the company’s corporate average fuel consumption and CO2 emissions, the BMW chief indicated an all-new front/all-wheel-drive model family is also expected to boost profits in the world’s growing compact and sub-compact market segments.

The Financial Times quotes Dr Reithofer as saying the new platform, apparently referred to internally as the UKL1 (for Untere Kompactklasse, or sub-compact), will allow BMW to “achieve its profitability aims in the small car sector” and could be offered to other car-makers as a means of further increasing economies of scale.

BMW development chief Klaus Draeger was also quoted as saying BMW could build between 600 and 800,000 front-drive cars a year without co-operating with another brand. Mr Reithofer forecast the ‘premium small car’ market to grow annually by four to six per cent until 2020.

Although it is unclear whether BMW will share the new chassis architecture with PSA Peugeot-Citroen, with which BMW currently shares its Mini engines – Mr Draeger told FT that BMW would “talk first” to car-makers with which it was already in partnership.

The new BMW compact family is expected to be built alongside the MkIII Mini range at Mini’s Oxford plant in the UK, with both model line-ups likely to be powered by a new range of three and four-cylinder petrol and diesel engines. Autocar reports the MkIII 1 Series, not due until 2018, could ride on a modified rear-drive version of UKL1.

Speaking at BMW’s Munich headquarters this week, Mr Reithofer said that, presumably with the help of its new babies, the BMW new-car range would have CO2 emissions averaging just 117g/km by 2020. The BMW Group has been ranked as the industry leader of Dow Jones’ Sustainability Indexes for the past five years.

Dr Reithofer said BMW was targeting sales growth of “solid single-digit percentage” and a significant improvement in group earnings this year, in an effort to meet profit goals for 2012, for which it continues to forecast a before-tax margin of between eight and 10 per cent for its automotive division – up from a low single-digit percentage targeted for its vehicle business in 2010.

“We are heading into the new business year with cautious optimism and are targeting group earnings well above the level reported for the past year,” he said. “We want to see visible progress in 2010 in the direction of our profitability targets for 2012.” “We intend to remain the world’s leading provider of premium cars in 2010 and plan to increase sales within a solid single-digit percentage range to over 1.3 million vehicles.” The BMW Group reported a pre-tax profit of €413 million ($A612 million) in 2009 – up 17.7 percent on 2008 figures – despite a 4.7 per cent reduction in revenue.

“We have successfully risen to the challenges posed in 2009 within a difficult market environment worldwide,” said Dr Reithofer. “We managed to reduce costs in all areas. Our efficiency improvement measures have been bearing fruit, even though the effects of the worldwide financial and economic crisis could still be felt.” Last year, the BMW Group sold 1,286,310 vehicles – down 10.4 per cent on 2008 (1,435,876) – including 1,068,770 BMWs (down 11.1 per cent), 1002 Rolls-Royces (down 17.3 per cent) and 216,538 Minis (down 6.8 per cent).

Highlights included sales increases for the 7 Series (52,680 units – up 35.7%), X6 (41,667 – up 56.8%) and Z4 (22,761 units – up 26.4%), while the additional X1 and 5 Series GT models attracted 8499 and 3052 sales respectively.

Dr Reithofer said that in 2010 BMW planned to again increase sales in China, where 90,536 group vehicles were sold in 2009 (up 37.5%), Brazil (6398 – up 118.8%) and India (3619 – up 24.4%).

However, last year saw BMW Group sales slump in the US by 20.3 per cent – to 241,727 vehicles.