BMW's next big thing doesn't have wheelsFebruary 5, 2013: 11:21 AM ET
The luxury automaker is setting its designers' and engineers' sights on a totally different kind of "ultimate driving machine."
By Doron Levin, contributor
FORTUNE -- BMW, in a bid to reinforce its already mighty brand, has decided to help design a two-man bobsled for world competition, culminating at the XXII Winter Olympiad in Sochi, Russia a year from now. The initiative is remarkable not just because BMW designs cars, not bobsleds, but because the automaker is helping the U.S., its most important market, not Germany.
The U.S. Olympic Committee and BMW's North America subsidiary formed the partnership to develop a sled with extremely light properties, such as carbon fiber, and "optimized" aerodynamics. First test of BMW's sled took place last month at the FIBT World Cup championships in Igls, Austria. To be clear, every bobsled must conform to international and Olympic standards -- the amount of latitude open to designers and engineers is limited.
U.S. teams running the BMW sled finished 14th of 30 entrants, though the president of the U.S. bobsled team told a Los Angeles Times blog he wasn't disappointed, given the team's unfamiliarity with the new sled. BMW earlier issued a statement saying it was "thrilled" to be competing with the new sled.
Michael Scully, creative director of DesignWorksUSA, BMW's Newbury, California-based international design consultancy said the automaker's techniques "are at the heart of the design, making it sleeker, lighter and we hope faster: essentially a BMW on ice."
BMW is locked in a fierce struggle against Mercedes-Benz, Audi and Lexus (TM) for dominance in the U.S. luxury market, as well as worldwide. The battle isn't just about selling more BMW-branded vehicles. Luxury brands try realize a stronger price for each unit based on a consumer's perception of greater value than a vehicle of similar characteristics carrying a less-estimable badge.
The differential between the cost of mainstream and luxury brands is much less than price -- meaning that luxury cars are much more profitable than more pedestrian models. According to Edmunds.com, the automotive website, BMW averages a $52,990 transaction price in the U.S., just below Mercedes' $54,454, and above Audi's $50,124.
Second-tier luxury brands such as Lexus, at $46,012, and Infiniti (NSANY), at $46,393, are striving to catch up, something they may be able to do as a result of brand-building.
For years BMW has relied heavily on its "Ultimate Driving Machine" tagline, an assertion that its customers demand superior performance and handling in their vehicles. A gold medal at the 2014 Olympic bobsled races could add to the suggestion that BMWs embody the very latest and greatest knowledge about how to go faster with more control.
The parallels between a car and a bobsled are a stretch, of course. A critical discussion with the Olympics has recently been resolved in BMW's favor. A BMW spokesperson said the BMW logo will appear on the U.S. sled in Sochi. BMW is eager for the American team to win with its sled, for American viewers to digest the notion that BMW equates with engineering excellence -- and maybe not to blanche when buying their next BMW automobile or motorcycle.