BMW Mini retains the success formula

Masterful – that's how auto critics describe BMW in connection with the manner by which it guides its Mini premium cars to achieve success in the auto market share.

From its inception in 2001, Mini has already made money. The latest lineup of Mini, which will go on sale this month in Europe to be followed by the United States, is expected to deliver stable profit chain.

According to Dresdner Kleinwort, Frankfurt, Germany-based investment banker, "Mini earned net income of $148 million in 2003 for its owners BMW, progressing steadily to $185 million in 2005 and is likely to reach $260 million in 2007." Mini started with modest sales target. On its initial years, the target was 100,000 per annum. Then, the number drastically grows to 120,000 and eventually accelerated to 200,000 last year.

"They (BMW) started the first Mini with a very conservative production approach. After they realised the strong demand, they added capacity nearly overnight. So, I'm pretty sure that they've again established a process which will allow pushing production beyond 300,000 cars if the customer demands," says Stephen Reitman, Merrill Lynch European auto analyst.

Mini is expected to reach higher grounds. "The Mini has been a phenomenal success, better than anyone expected, including BMW, but sales are close to their peaks, certainly in Europe," says Al Bedwell, J.D.Power Automotive Forecasting analyst.

Auto analysts affirm that Mini is a big thing in the United States. "Currently Mini sells in the states (about) the same number as in the U.K. The U.S. sells seven times more cars than the U.K., so I'm convinced there exists a lot of additional potential," says Ferdinand Dudenhoeffer, managing director of automotive consultants B&D Forecast of Bochum.

In addition, auto analysts are saying that BMW can benefit from the soaring mix of sales S, Cooper and basic Mini Ones. Parts Mini are now enhanced and made more sophisticated to hook car aficionados.

"And you are right. Mini is more of a fashion/luxury item and thus the concept is probably better comparable to Porsche than to normal car business. Therefore I also think it is not about practicability, but customers buy the car to make a statement," says Christoph Dolleschal, auto analyst with Dresdner Kleinwort. "Profitability wise the new Mini should do better than the old one. Pricing point is unchanged. However I think they've gained experience in production and simply are able to produce the car cheaper than the previous versions," he added.