History of BMW

BMW AG originated with three other manufacturing companies, Rapp Motorenwerke and Bayerische Flugzeugwerke (BFw) in Bavaria, and Fahrzeugfabrik Eisenach in Thuringia. Aircraft engine manufacturer Rapp Motorenwerke became Bayerische Motorenwerke in 1916. The engine manufacturer, which built proprietary industrial engines after World War I, was then bought by the owner of BFw who then merged BFw into BMW and moved the engine works onto BFw's premises. BFw's motorcycle sideline was improved upon by BMW and became an integral part of their business.

BMW became an automobile manufacturer in 1929 when it purchased Fahrzeugfabrik Eisenach, which, at the time, built Austin Sevens under licence under the Dixi marque. BMW's team of engineers progressively developed their cars from small Seven-based cars into six-cylinder luxury cars and, in 1936, began production of the BMW 328 sports car. Aircraft engines, motorcycles, and automobiles would be BMW's main products until World War II. During the war, against the wishes of its director Franz Josef Popp, BMW concentrated on aircraft engine production, with motorcycles as a side line and automobile manufacture stopped altogether.

After the war, BMW survived by making pots, pans, and bicycles until 1948, when it restarted motorcycle production. Meanwhile, BMW's factory in Eisenach fell in the Soviet occupation zone and the Soviets restarted production of pre-war BMW motorcycles and automobiles there. This continued until 1955, after which they concentrated on cars based on pre-war DKW designs. BMW began building cars in Bavaria in 1952 with the BMW 501 luxury saloon. Sales of their luxury saloons were too small to be profitable, so BMW supplemented this with building Isettas under licence. Slow sales of luxury cars and small profit margins from microcars caused the BMW board to consider selling the operation to Daimler-Benz. However, Herbert Quandt was convinced to purchase a controlling interest in BMW and to invest in its future.

Quandt's investment, along with profits from the BMW 700, brought about the BMW New Class and BMW New Six. These new products, along with the absorption of Hans Glas GmbH, gave BMW a sure footing on which to expand. BMW grew in strength, eventually acquiring the Rover Group (most of which was later divested), and the license to build automobiles under the Rolls-Royce marque.

History of Bayerische Flugzeugwerke (BFw)

Gustav Otto Flugmaschinenfabrik

Gustav Otto, the son of inventor and industrialist Nikolaus August Otto, was a pioneer aviator in Bavaria. In 1910, Otto received German aviation license no. 34, proving his competence in an Aviatik-Farman. In the same year, Otto set up a training school and an aircraft factory, The factory, which was named Gustav Otto Flugmaschinenfabrik in 1913, was located on Lerchenauer Strasse, east of the Oberwiesenfeld troop maneuver area in the Milbertshofen district of Munich. Otto concentrated on building Farman inspired pushers and became the main supplier for the Bayerische Fliegertruppen (Royal Bavarian Flying Corps). Gustav Otto Flugmaschinenfabrik, renamed Otto Werke in January 1915, did not get orders from the Prussian military due to unexplained quality issues. The military urged Otto to revise his production line, but the issues were not resolved. Suffering financially, the Otto company was purchased by a consortium, which included MAN AG as well as some banks, in February 1916.

Gustav Otto had other companies grouped under AGO Werke, which from 1914 developed different aircraft from Otto-Werke. AGO had similar problems as Otto Werke and closed in 1918. AGO's facilities were taken over by AEG.

Bayerische Flugzeugwerke (BFw)

One month after buying Otto Werke, the investors established a new business, Bayerische Flugzeugwerke AG (BFw), on the company’s premises. BFW manufactured aircraft under license from the Albatros Flugzeugwerke of Berlin. Within a month of being set up, the company was able to supply aircraft to the war ministries of Prussia and Bavaria. However, major quality problems were encountered at the start, with German air crews frequently complaining about serious defects in the first machines from BFw. The same thing had happened with aircraft from Otto Werke before the takeover. These deficiencies were due to a lack of precision in production. The majority of the workforce had been taken over by BFw from Otto Werke. Organizational changes and more intensive supervision of the assembly line resolved these problems by the end of 1916. BFw was able, in the months that followed, to turn out over 100 aircraft per month with a workforce of around 3,000, and rose to become the largest aircraft manufacturer in Bavaria.

The end of the war hit BFw hard, since military demand for aircraft collapsed. The company’s management was forced to find new products in order to survive. Because aircraft were largely built from wood at that time, BFw was equipped with the very latest joinery plant and held enough stock of materials to build about 200 aircraft, which was worth 4.7 million reichsmarks. The company used the machinery and the materials in the production of furniture and fitted kitchens. In addition, from 1921 onwards, The company also built a motorized bicycle called the Flink and a motorcycle called the Helios. The Helios used a BMW M2B15 engine.

In the autumn of 1921 the Austrian financier Camillo Castiglioni first announced his interest in purchasing BFw. While most of the shareholders accepted his offer, MAN AG initially held on to its shareholding in BFw. But Castiglioni wanted to acquire all the shares. He was supported in this by BMW’s Managing Director Franz Josef Popp who, in a letter to the chairman of MAN, described BFw as a “dead factory, which possesses no plant worth mentioning, and consists very largely of dilapidated and unsuitable wooden sheds situated in a town that is extremely unfavorable for industrial activities and whose status continues to give little cause for enthusiasm”. By the spring of 1922, Castiglioni bought MAN's shares in BFw, so that the company belonged exclusively to Castiglioni. In May of the same year, when Castiglioni acquired BMW’s engine business from Knorr-Bremse, he merged the aircraft company BFw into the engine builder BMW.

A later, unrelated BFw

The name Bayerische Flugzeugwerke AG was revived in 1926 when Udet-Flugzeugbau GmbH was changed into a joint-stock company. In the early stages, BMW AG held a stake in this company and was represented by Popp, who held a place on the Supervisory Board. In time this company was renamed to Messerschmitt, an important and leading aircraft company for the Third Reich.

Origin and history of BMW to the end of World War I

Rapp Motorenwerke

In 1913 Karl Rapp established Rapp Motorenwerke near the Oberwiesenfeld.^[1] Rapp had chosen the site because it was close to Gustav Otto Flugmaschinenfabrik, with whom he had contracts to supply his four-cylinder aircraft engines.^[1]

Rapp was sub-contracted by Austro-Daimler to manufacture their V12 aircraft engines. Austro-Daimler at the time was unable to meet its own demands to build V12 Aero engines. The officer supervising aero-engine building at Austro-Daimler on behalf of the Austrian government was Franz Josef Popp. When it was decided to produce Austro-Daimler engines at Rapp Motorenwerke, Popp was delegated to Munich from Vienna to supervise engine quality.^[1]

Popp did not restrict himself to the role of observer, becoming actively involved in the overall management of the company. On 7 March 1916, Rapp Motorenwerke became Bayerische Motoren Werke GmbH.^[2] Popp convinced Karl Rapp to accept the application of Max Friz, a young aircraft engine designer and engineer at Daimler. At first Rapp was going to turn down Friz’s request; however, Popp successfully intervened on Friz’s behalf, because he recognized that Rapp Motorenwerke lacked an able designer. Within a few weeks Friz designed a new aircraft engine which, with an innovative carburettor and a variety of other technical details, was superior to any other German aero-engine. Later, this engine would gain world renown under the designation “BMW IIIa”.

Bayerische Motoren Werke GmbH 1917

The departure of Karl Rapp in 1917 enabled a fundamental restructuring of BMW GmbH, formerly Rapp Motorenwerke. While the development side was placed under Max Friz, Franz Josef Popp took over the post of Managing Director. Popp held this key position until his retirement in 1942, and was instrumental in shaping the future of BMW.

For the small BMW business, the large orders received from the Reichswehr for the BMW IIIa engine were overwhelming. Under Karl Rapp only a small number of engines had been produced and the manufacturing facilities were not in any way adequate to handle the mass production now required. Not only did BMW lack suitable machine tools but, to a very large degree, skilled manpower as well. However, the most serious drawback was in the small and aging workshops. Nevertheless, under the state-controlled war economy, officials in the relevant ministries were able to give BMW extensive practical support.^[3] So in a short time BMW got the skilled workers and machinery it needed. In addition, the Munich company received a high level of financial assistance, which enabled it to build a completely new factory from the ground up, in the immediate vicinity of the old workshops. Due to the share capital being too small, both the building of the new plant and the working capital needed for materials and wages had to be financed with external funds, i.e. bank loans or state assistance. The war ministries of Bavaria and Prussia (then both separate kingdoms within the Kaiser’s Empire) did not, however, wish to go on supporting BMW with loans and guarantees, and therefore urged the flotation of a public limited company.^[4]

BMW logo

The name-change to Bayerische Motoren Werke compelled management to devise a new logo for the company, therefore the famous BMW trademark is designed and patented at this time. However, they remained true to the imagery of the previous Rapp Motorenwerke emblem (which was designed by Karl's brother, Ottmar Rapp). Thus, both the old and the new logo were built up in the same way: the company name was placed in a black circle, which was once again given a pictorial form by placing a symbol within it. By analogy with this, the blue and white panels of the Bavarian national flag were placed at the center of the BMW logo. Not until the late 1920s was the logo lent a new interpretation as representing a rotating propeller.^[5] The BMW Trademark, called a "roundel", was submitted for registration on the rolls of the Imperial Patent Office, and registered there with no. 221388 on 10 Dec 1917.

BMW AG

In 1917 Julius Auspitzer’s son-in-law, Max Wiedmann, held about 80 percent of the shares in Rapp Motorenwerke. He had obtained most of these shares from his father-in- law in 1914 and had thus become a figure of great influence in the business. Even after the name-change to Bayerische Motoren Werke GmbH, Wiedmann remained the principal shareholder in the company. Wiedmann’s capitulation in July 1918 opened the way for the founding of a public limited company. On 13 August 1918 BMW AG was entered as a new company in the Commercial Register and took over from BMW GmbH all its manufacturing assets, order book and workforce.^[6] The old BMW GmbH was renamed "Maschinenwerke Schleißheimerstrasse" and was wound up on 12 November 1918. The share capital of BMW AG amounting to 12 million reichsmarks was subscribed by three groups of investors. One third of the shares was taken up in equal parts by the Bayerische Bank and the Norddeutsche Bank. A further third of the shares (worth 4 million reichsmarks) was acquired by the Nuremberg industrialist, Fritz Neumeyer. This ensured that 50 percent of the capital (6 million reichsmarks) was in the hands of Bavarian businesses or banks. The Bavarian government placed the highest value on this strong local shareholding. The final one-third of the BMW shares were taken up by a Viennese financier, Camillo Castiglioni.^[3]

Castiglioni

During the war, Castiglioni had been one of the principal players in the Austro-Hungarian aircraft industry, and for a long time had had links with Rapp Motorenwerke. So he had probably already been influential in negotiating the major order from Austro-Daimler Motoren to Rapp Motorenwerke in 1916 and would have received a large commission on this. However, Castiglioni’s interests were not restricted to Austria. As early as 1915, by merging a number of companies, he had founded Brandenburgische Flugzeugwerke in the Berlin area, which supplied aircraft to the German navy. It seemed only logical that he would want to extend his network of companies by adding a German aero-engine manufacturer.

First crisis for BMW AG – WWI aftermath

Winter 1918 factory closure

The end of the war in November 1918 had a huge impact on the entire German aircraft industry. Since 1914 the military had been placing lucrative orders with aircraft and aero-engine firms. But now, military demand collapsed completely. Civil aviation was still in its infancy, and no substitute business could be expected from that quarter. The end of the war hit BMW particularly hard, since the BMW IIIa aero-engine was the only product the company was building in 1918, and suddenly there was no more demand for aircraft engines.

In order to enable companies to resume civil production as rapidly as possible, a central demobilization office was set up as soon as the war was over, and branches opened right across Germany. The Commissioner for Demobilization with responsibility for Bavaria ordered the closure of BMW’s Munich plant with effect from 6 December 1918.^[3] The employees of the fledgling company faced locked factory gates and a future that was far from certain. The reason given by the civil servants for this factory closure was the general shortage of raw materials such as coal and metals. The small supplies of coal that were still on hand had to be made available for the freezing population, and such supplies of metals as remained were diverted to consumer industries. As a former armaments manufacturer, BMW was sent away empty-handed.

Factory reopened

BMW’s top management was not discouraged by the compulsory closure decreed by the government. When permission was given for the gates to re-open on 1 February 1919, Managing Director Franz Josef Popp got the design department working constantly in order to have new products ready to sell to the peacetime market. Engines were designed for boats, cars, trucks and motorcycles. From the outset, BMW tried to remain an engine manufacturer. At the same time it also supplied industrial customers with products from its aluminum foundry.

In 1919 BMW was forced to give up building aircraft engines completely, which it had initially continued on a modest scale. The Allies had banned Germany from building aircraft and aircraft engines, and in addition had demanded that all aviation assets manufactured up to that date should be handed over or destroyed.^[7] While the new BMW engines for civilian use were technically advanced, they could not provide the company with long-term security in a highly competitive market. The top management therefore began looking for alternatives.

On 18 June 1919, BMW obtained a license agreement for the production of brake assemblies with the Berlin-based company Knorr-Bremse AG. The contract was to run for ten years and was intended to provide BMW with employment and profits until 1930. At that time, Knorr-Bremse manufactured state-of-the-art pneumatic brakes for trains and had the benefit of large, long-term contracts, which it could not, however, handle at its own factory. For this reason the Berlin company was looking for a manufacturer to license – and found it in Munich. One advantage BMW had in negotiating the contract was the announcement by the Bavarian government that they would be prepared to fit Bavarian trains with Knorr brakes provided they were manufactured in Bavaria.

Company sold to Knorr-Bremse

From the summer of 1919 onward, the manufacture of pneumatic brakes increasingly overshadowed engine production. The brake business occupied the majority of the BMW workforce, which was once again being expanded. This reorientation of the BMW product range had an effect on the ownership structure. As soon as the war ended, most of the BMW shareholders had lost interest in the company. Only the major shareholder Camillo Castiglioni still believed at first that BMW had a future, and took up all the company shares himself. However, Castiglioni was not an entrepreneur who took the long view; he was an astute financier in search of a quick return. The manufacture of railway brakes provided an opportunity to build up a solid business with sure profits, albeit small ones – too small for Castiglioni. In August 1920, when the chairman of Knorr-Bremse AG, Johannes Vielmetter, offered to buy all of Castiglioni's shares in BMW, the Viennese speculator accepted. BMW was now wholly owned by the Knorr-Bremse company of Berlin. The new proprietors made only minor alterations to the structure of BMW, since they wished neither to change the management nor to get involved in the production process.

Return of Castiglioni and merger with BFw

Under the leadership of Knorr-Bremse, BMW’s growth was considerable. Between the end of 1918 and 1921 the workforce grew from 800 to 1,800. In addition, the company set up its own training program with classes at the factory. In this way, in 1921 alone, BMW was able to offer solid technical training to some 200 young people. However, the price for this comfortable commercial situation was dependence on Knorr-Bremse and the abandonment of its core business of building aircraft engines.

In 1922, Castiglioni offered to buy BMW's engine-building division, aluminum foundry, name, and trademark from Knorr-Bremse. Castiglioni declared that he intended to set up an engine manufacturing plant of his own, and so he asked for the drawings, patents and machine tools needed for manufacturing the engines. He also wanted to take with him to his new company several key figures such as the chief designer, Max Friz, and the chief executive, Franz Josef Popp. The remainder of the company, including the premises, would remain under Knorr-Bremse's ownership and would be renamed. On 20 May 1922, Castiglioni bought the BMW name and engine-building business from Knorr-Bremse for 75 million reichsmarks. The remainder of the company became a subsidiary of Knorr-Bremse and was renamed Süddeutsche Bremse AG.^[8]

Castiglioni did not purchase BMW's premises in his transaction with Knorr-Bremse. Instead, he merged his Bayerische Flugzeugwerke (BFw) into BMW and established BMW's factory and headquarters at BFw's premises. BMW was moved into the same buildings of Gustav Otto's former Otto-Flugzeugwerke on Lerchenauer Strasse 76. BMW's headquarters have been at that address ever since.^{[1][8][9][10]}

BMW, with some 200 workers housed in the former BFw's old wooden sheds, began production on a modest scale. Initially its output was BFw motorcycles, proprietary engines, and spare parts for aircraft engines. To begin with, business for the “new” BMW AG did not go particularly well. The market for proprietary engines was still as hotly contested in 1921 as it had been in 1919 when BMW had gone into brake manufacture to secure its long-term future.

In 1923, while Germany suffered through a year of runaway inflation and numerous attempted coups, BMW made a successful new start: the company resumed production of aviation engines, selling them mainly to the Soviet Union, and it launched the first motorcycle of its own design, the R32.

R32 motorcycle

At the German Motor Show in Berlin (September 28 – October 7, 1923) BMW exhibited the R32 to the public for the first time. The first motorcycle from BMW convinced the experts immediately, and was an instantly popular product with consumers. A comment in the magazine DER MOTORWAGEN read: "And finally, the culmination of the exhibition, the new BMW motorcycle (494 cc) with the cylinders arranged transversely. Despite its youth it is a remarkably fast and successful motorcycle."

In 1924 BMW built its first model motorcycle, the R32. This had a 500 cc air-cooled horizontally opposed engine, a feature that would resonate among their various models for decades to come, albeit with displacement increases and newer technology. The major innovation was the use of a driveshaft instead of a chain to drive the rear wheel. To this day the driveshaft and boxer engine are still used on BMW motorcycles.

Automobiles

Austin-licensed BMW Dixi

BMW’s automobile history had begun much earlier than 1924, if only in the form of proposals and prototypes. Correspondence from 1918 shows the first use of the term “automobile” in BMW history, but no details are known to exist. BMW later manufactured several four-cylinder and two-cylinder engines that powered a variety of agricultural vehicles in the early 1920s. The spectrum of machinery driven across the land by BMW units ranged from single-track cars to huge farm tractors. Around 1925 two specially hired BMW designers, Max Friz and Gotthilf Dürrwächter, both former employees of Daimler-Benz in Stuttgart, were commissioned by BMW’s Managing Director Franz Josef Popp to design a BMW production car. The prototype of this design was the first car known to be made by BMW.

In 1928, BMW bought the Eisenach-based Dixi Automobil Werke AG from Gothaer Waggonfabrik. Dixi's sole product at the time of the purchase was the 3/15 PS, a licensed copy of the Austin 7, production of which had begun in 1927. The Dixi 3/15 became the BMW 3/15, BMW's first production car, upon the absorption of Dixi Werke into BMW.^[11]

BMW designs its own cars

Towards the end of 1930, BMW attempted to introduce a new front axle with independent wheel suspension for both their models, the BMW 'Dixi' 3/15 DA4 and BMW 'Wartburg' DA3, but this resulted in accidents with the prototypes because of construction faults.^[12] However, as the license with Austin would end in 1932, BMW decided upon the development of a completely new model and called in the help of German engineer Josef Ganz. He was hired as a consultant engineer at BMW in July 1931. At first, Josef Ganz negotiated with BMW about possible manufacture of his innovative rear-engined Maikäfer prototype at BMW. However, BMW decided for a different model, more along the lines of the previous Dixi model. Therefore, with the assistance of Ganz, work started on the development of the BMW AM1 (Automobilkonstruktion München 1), a small car with a front-mounted engine, rear-wheel drive, and independent wheel suspension with swing-axles.

Six-cylinder cars

In 1933, BMW introduced the 303.^[13][14] Larger and more conventional than the AM-series 3/20, the 303 used BMW's new M78 engine, making it the first BMW automobile to use a straight-six engine.^[14][15] The 303 was also the first BMW to use the "kidney grille" that would become a characteristic of BMW styling.^[16] The 303 formed the basis for the four-cylinder 309 and the larger-engined 315 and 319,^[17][18] while the 303 chassis supported the 315/1 and 319/1 roadsters^[17][19] and the restyled 329.^[20]

The 303 platform was supplemented and later supplanted by the 326, a larger car with a more rigid frame. Introduced in 1936, the 326 was BMW's first four-door sedan.^[21][22] A shortened version of the 326 frame was used in the 320, which replaced the 303-framed 329, in the 321, which replaced the 320, and in the 327 coupé.^[23][24]

The 328 replaced the 315/1 and 319/1 roadsters in 1936. Unlike the 303-based 315/1 and 319/1, the 328 had a purpose-built frame.^[20] While the 315/1 and 319/1 had M78 engines in a higher state of tune than in the respective 315 and 319 sedans,^[25] the 328's M328 engine had a specially-designed hemispheric cylidner head and other modifications that brought its power to 80 PS (59 kW).^[26] From its introduction at the Eifelrennen race at the Nürburgring in 1936, where Ernst Henne drove it to win the 2.0 litre class,^[20][27] to the overall victory of Fritz Huschke von Hanstein at the 1940 Brescia Grand Prix during World War II,^[28][29] the 328 was a legendary performer, with more than 100 class wins in 1937 alone.^[30]

An extended version of the 326's frame was used in the 335, a luxury car with the 3.5 litre M335 engine.^[31] The 335 was built from 1939 to 1941.^[32]

World War II

The German invasion of Poland and commencement of hostilities meant that manufacturing facilities in Germany were directed by the Nazi regime to re-focus on the manufacture of products required to support the war effort. For BMW, that meant an emphasis on production of aircraft engines. In 1939, BMW bought Spandau-based Brandenburgische Motorenwerke, also known as Bramo, from the Siemens group of companies and merged it with its aircraft engine division under the name BMW Flugmotorenbau GmbH. A new factory at Allach, outside Munich, began production of aircraft engines later that year.^[33]

Franz Josef Popp argued against this policy, contending that, although financially lucrative, the change in focus would mean that the BMW AG would be heavily dependent on decisions made by the Nazi regime. In June 1940, he wrote to the Chairman of the Supervisory Board, Emil Georg von Stauss, explaining that the situation could “threaten the very existence of BMW AG if there were any setback to aero engine production”.^[4] This change in focus did in fact lead to a significant increase in external control from political and military agencies, weakening the position of the BMW management and eroding the position of Franz Josef Popp, whose leadership of BMW had been relatively autonomous and autocratic to that point. Statutes enacted on October 1, 1940 required all subsidiaries to transfer profit and loss responsibility to BMW AG. Expansion of the aero engine business required several injections of capital to Flugmotorenbau GmbH, with the total capitalization of BMW AG increasing in stages to RM 100 million by 1944. Further restructuring was carried out in 1944, with centralization of sales in BMW AG and the GmbHs acting only as property companies.

The emphasis on aero engines caused significant changes in BMW AG's business. Motorcycle production located at the Munich manufacturing facility abandoned production of non-military motorcycles by 1940, producing only the R12 and the R75, which were supplied to the Wehrmacht. At the beginning of 1942, motorcycle production was transferred to Eisenach so that the Munich plant could be dedicated to aero engine fabrication, and in 1942, BMW abandoned motorcycle production altogether. BMW also ceased production of automobiles in 1940, since cars were not being produced for the military. Only automobile repair facilities were retained, along with a development department.

A wide range of aero engines was ultimately produced for the Luftwaffe, including one of the most powerful engines of the time – the BMW 801. Over 30,000 aero engines were manufactured through 1945, as well as over 500 jet engines such as the BMW 003. To enable this massive production effort, forced labor was utilized, consisting primarily of prisoners from concentration camps such as Dachau.^[34] By the end of the war, almost 50% of the 50,000-person workforce at BMW AG consisted of prisoners from concentration camps. BMW also developed some military aircraft projects for the Luftwaffe towards the last phase of the Third Reich, the BMW Strahlbomber, the BMW Schnellbomber and the BMW Strahljäger, but none of them were built.^[35]

BMW AG plants were confiscated by Allied troops at the end of the war, and production of aero and jet engines for the Luftwaffe was shut down.

Second crisis for BMW AG – WWII aftermath

BMW AG was heavily bombed towards the end of the war, reducing most of the company's production facilities to rubble. In fact, by the end of the war, the Munich plant was completely destroyed.^[36] Of its sites, those in eastern Germany (Eisenach-Dürrerhof, Wandlitz-Basdorf and Zühlsdorf) were seized by the Soviets.

After the war the Munich factory took some time to restart production in any volume. BMW was banned from manufacturing motor vehicles by the Allies. During this ban, BMW used basic secondhand and salvaged equipment to make pots and pans, later expanding to other kitchen supplies and bicycles. Permission to manufacture motorcycles was granted to BMW by United States authorities in 1947, and production of the R24 began in 1948.^[37]

In the east, the company's factory at Eisenach was taken over by the Soviet Awtowelo group.^[37][38] Production of the R35 motorcycle was restarted in 1945,^[38] with the 321 automobile following late that year.^[37][38] A mildly revised 327 entered production in 1948, followed by the 326-based 340 in 1949. These were sold under the BMW name with the BMW logo affixed to them.^[39] To protect its trademarks, BMW AG legally severed its Eisenach branch from the company. Awtowelo continued production of the 327 and 340 under the Eisenacher Motorenwerk (EMW) brand with a red and white version of the logo until 1955.^[37]

In the west, the Bristol Aeroplane Company (BAC) inspected the factory, and returned to Britain with plans for the 327 model and the six-cylinder engine as official war reparations. Bristol then employed BMW engineer Fritz Fiedler to lead their engine development team. In 1947, the newly formed Bristol Cars released their 400 coupé, a lengthened version of the BMW 327. that featured BMW's double-kidney grille.^[40]

While Alfred Böning had returned to BMW and developed the R24^[37] and Fritz Fiedler had gone to work for Bristol,^[40] Alex von Falkenhausen and Ernst Loof had each started companies that built sports cars and racing cars. Von Falkenhausen started Alex von Falkenhausen Motorenbau (AFM), while Loof, in partnership with Georg Meier and Lorenz Dietrich, started Veritas. AFM and Veritas both competed in Formula 2, but both companies had shut down operations by 1954, when both von Falkenhausen and Loof were back at BMW.^[41][42]

Three approaches to car manufacture

By the end of the 1940s BMW had returned to motorcycle manufacture but still had not restarted automobile manufacture.^[43] Kurt Donath, technical director of BMW and general manager of the Milbertshofen factory,^[37] solicited manufacturers, including Ford and Simca, to produce their vehicles under licence. In particular, Donath was looking to produce old models under licence, so that he could buy tooling along with the licence.^[44]

While Donath was trying to find a car to build under licence, chief engineer Alfred Böning developed a prototype for a small economy car powered by a motorcycle engine. Called the BMW 331, the prototype used a 600 cc motorcycle engine, a four-speed gearbox, and a live rear axle. The body was designed by Peter Schimanowski and resembled a BMW 327 in miniature.^[44]

The BMW 331 was proposed for production to the management, where it was vetoed by sales director Hanns Grewenig. Grewenig, a banker and former Opel plant manager, believed that BMW's small production capacity was best suited to luxury cars with high profit margins, similar to the cars BMW made just before the war. To this end, he had Böning and his team design the 501.^[45]

When the 501 was introduced in 1951, its cost of approximately DM15,000 was about four times the average German's earnings.^[46] It was also much heavier than expected and underpowered with a development of BMW's pre-war two litre six.^[46][47] Delays in receiving and setting up equipment caused production of the 501 to be delayed until late 1952,^[46][48] with body construction, originally expected to be done in-house, being done by Karosserie Baur in Stuttgart for more than a year.^[48]

In 1954, the 501 was given an improved, more powerful version of its six-cylinder engine and split into two models, the 501A at basically the same trim level and a price reduction of DM1,000, and a decontented 501B at a further price reduction of DM1,000 below the 501A's price.^[49][50] In addition, the 502, basically a 501 with an even higher trim level^[49][50] and a 2.6 L aluminium V8 engine^[49][51] designed by Bőning and Fiedler,^[52] was introduced to lead BMW's luxury sedan range.^[49][50] The expanded line for 1954 doubled the sales of BMW's luxury cars.^[50]

Influenced by the public response to the introduction of Mercedes-Benz's 300SL and 190SL show cars at the International Motor Sports Auto Show in New York in February 1954, the management of BMW approved Grewenig's proposal to build a sports car based on the 502.^[53] Preliminary design sketches were seen by U.S. importer Max Hoffman, who suggested to industrial designer Albrecht von Goertz that he should submit design proposals to BMW's management as an alternative. Based on these proposals, BMW contracted the design of the sports car and a four-seat grand tourer to von Goertz in November 1954.^[54] The 507 roadster was introduced at the Waldorf-Astoria Hotel in New York in the summer of 1955,^[55][56] while the 503 four-seater was introduced in September of that year at the Frankfurt Motor Show.^[54]

Hoffman told BMW that he would order 2000 507s if he could sell them for US$5,000 each. When the selling price was given as about twice that, and higher than the 300SL, he withdrew his offer.^[57][58] 412 units of the 503 and 253 of the 507 were built during their production runs from 1956 (May for the 503, November for the 507) to March 1959.^[58][59][60]

Motorcycles were BMW's largest money earner at the time, and their sales had peaked in 1954. Germans were turning away from mopeds and motorcycles toward light automobiles such as the Messerschmitt and the Goggomobil. Eberhard Wolff, BMW's head of automotive development, saw the Iso Rivolta Isetta bubble car at the 1954 Geneva Motor Show and suggested to his managers the possibility of building the Isetta under licence.^[61][62] BMW entered talks with Iso Rivolta and bought both a licence to manufacture the Isetta and all the tooling needed to manufacture its body.^[62][63] Production of BMW's version of the Isetta began in 1955; more than ten thousand Isettas were sold that year.^[63] BMW made more than a hundred thousand Isettas by the end of 1958,^[64] and a total of 161,728 by the end of production in 1962.^[65]

BMW knew that it needed a four-seat family car to keep up with the rising wealth and expectations of the German people, but it could not access funding to develop a new car for this market. They therefore developed the 600, a four-seat car based on the Isetta. The 600 used the front suspension, the front seats, and the front-mounted door from the Isetta, but used a new, longer ladder frame with a longer, four-seat body, a rear-mounted 0.6 L flat-twin motorcycle engine, and a full-width rear track. The 600's rear suspension was BMW's first use of the semi-trailing arm system that would be used on their sedans and coupes until the 1990s. Released in 1957, the 600 could not compete against the larger, more powerful Volkswagen Beetle. Production ended in 1959 after fewer than 35,000 were built.^[66][67][68]

Third crisis for BMW AG – a company for sale

By 1959, BMW was in debt and losing money.^[69] The Isetta was selling well but with small profit margins.^[70] Their 501-based luxury sedans were not selling well enough to be profitable and were becoming increasingly outdated.^[71] Their 503 coupé and 507 roadster were too expensive to be profitable.^[71] Their 600, a four-seater based on the Isetta, was selling poorly.^[66] The motorcycle market imploded in the mid-1950s with increased affluence turning Germans away from motorcycles and toward cars.^[61] BMW had sold their Allach plant to MAN in 1954.^[72] American Motors and the Rootes Group had both tried to acquire BMW.^[73]

At BMW's annual general meeting on 9 December 1959, Dr. Hans Feith, chairman of BMW's supervisory board, proposed a merger with Daimler-Benz. The dealers and small shareholders opposed this suggestion and rallied around a counter-proposal by Dr. Friedrich Mathern, which gained enough support to stop the merger.^[70][73] At that time, the Quandt Group, led by half-brothers Herbert and Harald Quandt, had recently increased their holdings in BMW and had become their largest shareholder.^[73] By the end of November 1960, the Quandts owned two-thirds of BMW's stock between them.^[69]

By this time BMW had launched the 700, a small car with an air-cooled, rear-mounted 697 cc boxer engine derived from the engine powering the R67 motorcycle. It was available as a 2-door sedan and as a coupe, both versions having been designed by Giovanni Michelotti.^[74] There was also a more powerful RS model for racing.^[75]

At the Frankfurt Motor Show in 1961, BMW launched the 1500, a compact sedan with front disc brakes and four-wheel independent suspension.^[76] This modern specification further cemented BMW's reputation for sporting cars. It was the first BMW to officially feature the "Hofmeister kink", the rear window line that has been the hallmark of all BMWs since then.

The "New Class" 1500 was developed into 1600 and 1800 models.^[77] In 1966, the two-door version of the 1600 was launched, along with a convertible in 1967. These models began the '02' series, of which the 2002 was the best known, and which was continued until 1976 when it was replaced by the BMW 3 Series.^[78]

By 1963, with the company back on its feet, BMW offered dividends to its shareholders for the first time since World War II.^[79]

Expansion- Hans Glas GmbH

By 1966, the Munich plant had reached the limits of its production capacity. Although BMW had initially planned to build an entirely new factory, the company bought the crisis-ridden Hans Glas GmbH with its factories in Dingolfing and Landshut. Both plants were restructured, and in the following decades BMW's largest plant took shape in Dingolfing.

In 1968, BMW launched its large "New Six" sedans, the 2500, 2800, and American Bavaria, and coupés, the 2.5 CS and 2800 CS.

Of major importance to BMW was the arrival of Eberhard von Kuenheim from Daimler-Benz AG. Just 40 years old, he presided over the company's transformation from a national firm with a European-focused reputation into a global brand with international prestige.

BMW became commercially successful by the mid 1960s. In December 1971, BMW moved into their current headquarters in Munich. The architecture of the headquarters building is based on four cylinders.

In 1972, the 5 Series was launched to replace the New Six sedans, with a body styled by Bertone. The new class coupes were replaced by the 3 Series in 1975, and newly introduced larger sedans became the 7 Series in 1977. Thus the three-tier sports sedan range was formed, and BMW essentially followed this formula into the 1990s. Other cars, like the 6 Series coupes that replaced the CS and the M1, were also added to the mix as the market demanded.

From 1970 to 1993, under von Kuenheim, turnover increased 18-fold, car production quadrupled and motorcycle production tripled.

Rover

Between 1994 and 2000, under the leadership of Bernd Pischetsrieder, BMW owned the British Rover Group, having bought it from British Aerospace. This brought the active Rover, Mini and Land Rover brands as well as rights to many dormant marques such as Austin, Morris, Riley, Triumph and Wolseley under BMW ownership.

The venture was not successful. Already struggling after years of industrial disputes, Rover had a poor reputation but in trying to improve its image it would become a rival to the BMW market segment. BMW found it difficult to reposition the English automaker alongside its own products and the Rover division was faced with endless changes in its marketing strategy. In the six years under BMW, Rover was positioned as a premium automaker, a mass-market automaker, a division of BMW and an independent unit. A five part BBC documentary, When Rover Met BMW (1996), gave some insight into the difficulties faced by the two firms.^[80]

It is possible that some development work on the Rover R30 model may have eventually benefitted the BMW 1 Series.^[81]

BMW was more successful with the Mini, MG and Land Rover brands, which did not have parallels in its own range at the time.

In 2000, BMW disposed of Rover after years of losses, with Rover cars going to the Phoenix Venture Holdings for a nominal £10 and Land Rover going to the Ford Motor Company. The German press ridiculed the English firm as "The English Patient", after the film. BMW itself, protected by its product range's image, was largely spared the blame. Even the British press was not particularly sympathetic towards Rover.

BMW retained the rights to Mini, Triumph and other marques. MINI has been a highly successful business, though the other names have not been used yet. Following the bankruptcy of MG Rover in 2005, the Rover name was sold to Ford in 2006 after BMW gave it a first refusal offer in 2000. However, Ford did not release any Rover-badged cars before selling the name to Tata Group, while the MG brand has been relaunched by Nanjing Automobile of China.

Design controversy

In the early 2000s, BMW undertook another of its periodic cycles of redoing the design language of its various series of vehicles, under the auspices of the then design chief Christopher Bangle. These controversial designs often featured unconventional proportions with complex concave and convex curved surfaces combined with sharp panel creases and slashes, a design cue called "flame surfacing". Much of the new language did not rest well with BMW enthusiasts or the automotive press which referred to the new designs as "Bangled" or "Bangle-ised". Although Bangle did not pen all of the new designs himself, as the design chief he was ultimately responsible for the direction that the company took and thus received much of the criticism. As Bangle had been promoted within the company to the BMW Group Head of Design, leaving him in charge of not only BMW but also Rolls-Royce and Mini, some questioned what long-term effect the disaffection of BMW traditionalists for these designs will have on sales, and on the company's future. Sales at BMW have increased every year since some of his most debated designs have gone into production.

Many aspects of the "controversial" designs are now beginning to surface in other auto manufacturer's designs. Though the design debuted and was popularized by BMW's 7-Series, Hyundai incorporated this design cue in 1999, three years before the 7-Series was released, and Maybach incorporated it since its first showing in 1997.

Bangle was also responsible for many 'conservative' BMW designs and has worked at BMW for almost a decade. The first X5 sketches (which closely resembled the production car), were designed by him, and under his tenure the E46 3 Series came to be. Despite much of the scorn heaped on Chris Bangle, his design selections were approved by the entire executive board of BMW AG, including the majority owners, the Quandt family. BMW's design team has won numerous awards with him at the helm.

Production outside Germany

BMW's Rosslyn, South Africa, plant was the first BMW assembly line established outside Germany, with production starting in 1973.^[83] The wholly owned subsidiary now exports over 70% of its output. In the mid-1990s, BMW invested R1bn to upgrade the Rosslyn factory. The plant now exports over 50,000 3 Series cars a year, mostly to the USA, Japan, Australia, Africa and the Middle East.

BMW started producing automobiles at its Spartanburg, South Carolina, plant in 1994. Today, the plant manufactures the BMW X5 and the BMW X6. The production of the BMW X3 will be moving to Spartanburg from Europe after the completion of a major expansion of the U.S. facility.

The Spartanburg plant is open six days a week, producing automobiles approximately 110 hours a week. It employs about 4,700 people and manufactures over 600 vehicles daily. Recently, the plant has undergone a major renovation switching from 2 production lines down to one. Both the X5 and the X6 are produced in the same line, one right after the other.

Outside Germany, the largest output of the BMW Group comes from British factories. The Hams Hall plant manufactures four-cylinder BMW engines for use around the world in 3-Series, 1-Series and Z4 vehicles. This is in addition to MINIs and Rolls-Royces made in Oxford and Goodwood.

BMW signed agreement in 1999 with Avtotor to produce cars in Kaliningrad, Russia. Factory has been assembling 3 and 5 -series cars.^[84]

Starting from October 2004, BMWs intended for the Chinese market are produced in Shenyang, China.^[85] BMW has established a joint venture with Chinese manufacturer Brilliance to build BMW 3 Series and 5 Series that have been modified for the needs of local markets.

The BMW X3 was manufactured in Graz, Austria between 2004 and 2007 by Magna Steyr with mainly German components. The X3 production will be moved to the Spartanburg plant due in part to high production and transportation costs of what was meant to be the "more affordable" SUV. North American pricing, after said costs, were nearly on par with the larger, American-built X5.^[86]

In 2005, BMW Group built a new manufacturing facility in Egypt. This plant builds 3 Series, 5 Series, 7 Series, and X3 vehicles for the African and Middle East markets.

BMW opened its first assembly plant in Chennai, India in March 2007 to assemble 3-series and 5-series vehicles. The 20 Million Euro plant aims to produce 1,700 cars per year in the medium term, though this could rise to up to 10,000 cars if demand grows.^[87] The new factory may also be used to help boost the production of BMW’s super-successful MINI.^[88] BMW India headquarters is located in Gurgaon outside Delhi.

Rolls-Royce

In the early 1990s, BMW and Rolls-Royce Motors began a joint venture that would see the new Rolls-Royce Silver Seraph and Bentley Arnage adopt BMW engines.

In 1998, both BMW and Volkswagen tried to purchase Rolls-Royce Motors. Volkswagen outbid BMW and bought the company for £430 million, but BMW outflanked its German rival. Although Volkswagen had bought rights to the "Spirit of Ecstasy" mascot and the shape of the radiator grille, it lacked rights to the Rolls-Royce name. Rolls-Royce plc (the aero-engine business) retained the rights over the Rolls-Royce trademark and wished to strengthen its existing business partnership with BMW which extended to the BMW Rolls-Royce joint venture. Consequently, BMW was later in 1998 allowed to acquire the rights to use the name "Rolls-Royce and "RR" logo on cars for £40 million.

In a separate deal BMW agreed to let Volkswagen use the name "Rolls-Royce and "RR" logo on cars until 2003 on condition that BMW would get the right to the grille and mascot from 2003, onwards.

BMW supplied the engines to the current Seraph/Arnage range and their supply contract had a clause that allowed BMW to stop the supply of engines the day another owner, (than then Vickers plc), took over the company. BMW could effectively stop Volkswagens Seraph/Arnage production. This might have biased the deal.

Volkswagen was permitted to build Rolls-Royces with all three trademarks at its Crewe factory until 2003. Volkswagen shifted its emphasis to the Bentley brand during that time.

BMW had all three key Rolls-Royce trademarks in 2003, by which time they had a new factory and a new model. The new factory at Goodwood produced the new Rolls-Royce Phantom, unveiled on January 2, 2003, and officially launched at the Detroit Auto Show on January 5, 2003. The model, priced around US$330,000, has experienced record sales worldwide of 796 Phantoms sold in 2005. Rolls-Royce Motor Cars, BMW's subsidiary manufacturing Rolls-Royces, has since launched the Rolls-Royce Ghost.

See also

• BMW AG

References

Citations

Sources

• Kiley, David (2004). Driven: Inside BMW, the Most Admired Car Company in the World. Hoboken, NJ US: John Wiley & Sons. ISBN 0-471-26920-4. Retrieved 2013-03-03. 
• Lewin, Tony (2004). "Faded glory". The Complete Book of BMW: Every Model since 1950. St. Paul, MN USA: Motorbooks International. pp. 23–37. ISBN 0-7603-1951-0. Retrieved 2013-11-24. 
• Madslien, Jorn (2007-03-29). "BMW unveils India assembly plant". BBC News. Archived from the original on 2012-11-12. Retrieved 2011-12-18. 
• Melissen, Pieter (2009-04-17). "Bmw 700 rs". Ultimatecarpage.com. Wouter Melissen. Archived from the original on 2012-04-15. Retrieved 2010-06-23. 
• Noakes, Andrew (2005). The Ultimate History of BMW. Bath, UK: Parragon Publishing. ISBN 1-4054-5316-8. 
• Norbye, Jan P. (1984). BMW - Bavaria's Driving Machines. Skokie, IL, USA: Publications International. ISBN 0-517-42464-9. LCCN 84060309. 
• Seeliger, Georg (1993). BMW 503/507: Die V8-Sportmodelle (in German). Stuttgart: Motorbuch Verlag. p. 83. ISBN 3-613-01563-3. 
• Wang, James Jixian; Wang, James; Olivier, Daniel; Notteboom, Theo; Slack, Brian (2007). Ports, Cities, and Global Supply Chains. Ashgate Publishing. ISBN 0-7546-7054-6. Retrieved 2008-08-24. 
• Williams, Stephen (2010-01-07). "NY Times BMW Roundel Not Born From Planes". Wheels.blogs.nytimes.com. Archived from the original on 2010-01-10. Retrieved 2011-12-18. 
• BMW Historical Archives Bayerische Motoren Werke GmbH
• "BFI | Film & TV Database | WHEN ROVER MET BMW". Ftvdb.bfi.org.uk. Retrieved 2011-12-18. 
• "BMW increasing Spartanburg production to 200,000 yearly". BMW Car Club of America. Archived from the original on 2007-11-12. 
• "BMW Group Company History Milestones". Bmwgroup.com. Retrieved 2011-12-18. 
• monocom gmbh Dingolfing. "BMW Munich Plant". Bmw-werk-muenchen.de. Location - History - 1922. Archived from the original on 2012-11-23. Retrieved 2011-12-18. 
• "BMW 507 and 503 (1955-1960)". Car Body Design. Rome, Italy: FTM Studio. 21 November 2006. Archived from the original on 2013-11-03. Retrieved 30 November 2013. 
• The Dachau Concentration Camp, 1933 to 1945. Comite International Dachau. 2005. p. 171. ISBN 3-87490-751-1. 
• "BMW 2002". drivingtoday.com. Archived from the original on 2007-05-10. Retrieved 2007-06-22. 
• Article ‘Die Schwingachse des Kleinen,’ Motor-Kritik magazine, issue 3, early February 1931.
• "BMW launches new plant in Shenyang". english.people.com.cn. Retrieved 2007-06-22. 
• "Production of new BMW 5 series begins in Kaliningrad". Pravda (Pravda.Ru). 2004-03-29. Archived from the original on 2009-02-15. 

Further reading

• Halwart Schrader, Automobile Quarterly Editors (1985). The History of BMW. Dutton Books. ISBN 0-525-12522-1. 
• Halwart Schrader, Ron Wakefield (1979). Bmw: A History. Motorbooks Intl. ISBN 0-915038-15-3. 

External links

• BMW Group archives
• BMW models history in pictures

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