From Automotive News
March 22, 2004

BMW AG may scrap plans to export its new 1-series small car to the United States.

Company executives had said a version of the 1 series, most likely a sedan, would come to America 18 to 24 months after the five-door hatchback is launched in Europe this summer. BMW officials say the plans have changed.

"I am not prepared to say what sort of car we will bring," says Tom Purves, CEO of BMW North America.

He says the 1 series had been on track for sale in the United States, but "lots of things have changed."

He says U.S. dealers haven't vetoed the plan, and that a four-door hasn't been approved for production. He said it may be up to BMW North America to make a case that the 1 series can sell in the United States.

Burkhard Goeschel, BMW's top product development executive in Germany, said, "Despite the success of our Mini, U.S. customers still have to get used to small models."

Asked if the 1 series will come to the United States before 2007, Goeschel said: "This is not very likely. It has been a decision of BMW U.S.A. not to bring the 1 series to the U.S. for the near future." He added: "If we go to the U.S., it will be with another body variant (than the hatchback)."

Backpedaling

A Europe-based consultant working with BMW says the company is "backpedaling" because of the strong euro and because other 1 series derivatives are being considered.

"BMW is toying with changing the name of one of the body styles - it could be called the 2 series," the source said. "The U.S. may get a four-seat, two-door model with a trunk, but they would make it sleek and coupelike."

Calling the coupe a 2 series would follow BMW's strategy of making even-numbered models either coupes or sportier versions of sedans. That would allow BMW to price a 2 series higher - a strategy used in positioning the new 6 series coupe and convertible above the 7 series sedan.

The 1 series is based on the 3 series, which debuts next year. The 2 series also would use 3 series components.

The 1 series hatchback, which will be built in Regensburg, Germany, is 166.5 inches long - 9.5 inches shorter than the 3 series sedan.

Currency an issue

A European stock analyst who had heard that BMW is reconsidering plans to sell the 1 series in the United States said: "The fact that there has been this wobble suggests there has been rethinking because the exchange rate has changed dramatically."

The analyst, who spoke on condition that he not be named, added: "It raises the issue whether you can sell this vehicle profitably and if it helps you in terms of image and profitability."

BMW has currency-hedging arrangements with banks that provide partial protection from a weak dollar. But those arrangements end after 2005, near the time the 1 series would enter the U.S. market.

"If the euro stays strong and climbs, then the 2006 horizon will get difficult," the analyst said. "They'll have to increase prices, and that could put the viability of the 1 series program on hold."