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BMW, Germanys flagship automotive manufacturing company, has gone a long way.

About 60 years ago, its primary market (aeroengines) and capital equipment were both in ruins. Even during the German recovery period in the 50s, BMW did not prosper despite economic improvements everywhere. By 1959, BMW was so bankrupt, that a rescue by Mercedes served as its only way of staying afloat (Kay 1993). Today, BMW is one of the most respected companies and recognizable brands in the world. The BMW Group, according to its latest financial report, continues its leading position in premium segments of the international automobile markets. Despite persistently difficult conditions, a total of 341,932 BMW, MINI and Rolls-Royce brand cars were delivered to customers in the period from July to September 2005, 15.4% more than in the third quarter 2004, according to BMW.com. In the age of globalization, when distinctions between national markets are fading, this is no mean feat. BMW joins other major automotive manufacturers such as General Motors, Ford, Toyota, Honda, Volkswagen, and Daimler Chrysler in operating in a global competitive marketplace. How was BMW able to successfully respond to the challenges of globalization? What are the critical success factors required by BMW to compete successfully in their chosen segments? What are the competitive advantages that set BMW apart from its competitors? These and more are some of the issues that this paper will tackle. Key macro environmental impacting the automotive marketIncreasing global trade has enabled the growth in world commercial distribution systems, which has also expanded global competition amongst the automobile manufacturers, according to the Business Economics Research Advisor (2004). A phenomenon that mostly accelerated in the later half of 1990s, globalization of the automotive industry mostly transpired due to the construction of important overseas facilities and establishment of mergers between giant multinational automakers (Business Economics Research Advisor 2004). Industry specialists agree that the expansion in foreign commerce in the automobile industry mostly profited the German and Japanese markets and led to increased growth and production. In the automotive industry, globalization can have tremendous cost benefits. Automotive manufacturers have traditionally taken a multinational strategy in forming a global strategy, wherein they have traditionally operated separate organizations in North America, Europe, Asia, and South America that for the most part have acted independently with little if any synergies across organizations (Chandler n.d.). This strategy has resulted in substantial inefficiencies in product development costs and to a

lesser extent production costs. Traditionally, the separate geographic organizations within each auto manufacturer has developed and launched overlapping models. This overlapping represents substantial cost savings as these companies spend several years and billions of dollars designing and engineering a new car model (Chandler n.d.). To cope with globalization, automobile companies were forced to develop the following framework and integrate them in the global management strategy: product development; supply systems including factory locations; systems to purchase from the suppliers of parts, components, intermediary material and raw material; production systems at factories, and automobile sales and distribution systems although they may be different region by region (Shimogawa n.d.). EUs role in fostering European automobile exports The European Union (EU) has taken an active stance in fostering European automobile exports and investment through improved market access and a rules-based investment environment (European Union 2005). EU makes this a priority by engaging in World Trade Organization negotiations and the negotiation of the Free Trade Agreements in China and South East Asia to improve opportunities for export and investment for the European automobile industry (European Union 2005). Principal drivers of globalization in the automotive marketThe world's largest automobile manufacturers continue to invest into production facilities in emerging markets in order to reduce production costs. These emerging markets include Latin America, China, Malaysia and other markets in Southeast Asia (Business Economics Research Advisor 2004). Moreover, increasing global competition amongst the global manufacturers and positioning within foreign markets has divided the world's automakers into three tiers (please see below), with the two remaining tier manufacturers attempting to consolidate or merge with other lower tier automakers to compete with the first tier companies. 1st Tier Company Mergers - Volkswagen-Lamborgini; BMW-Rolls Royce 2nd Tier Company Mergers - Chrysler-Mercedes Benz; Renault-Nissan-Fiat 3rd Tier Company Mergers - Mazda-Mitsubishi; Kia-Volvo (Business Economics Research Advisor, 2004) A leader in innovation Innovation management seems to be the key to BMWs continuous leadership and sustainable growth. In 2002, the BMW Group received the Outstanding Corporate Innovator (OCI) Award 2002 - the first European enterprise to ever win - by the Product Development & Management Association, PDMA. This prestigious award is regarded as an Oscar of innovation management. In presenting the award, PDMA praised BMW

Group's innovation management as well as its unique worldwide research and network (Intel 2003). BMW is also an example of the intersection of commerce and art writ large (Bangle 2001). Plenty of companies face the challenge of balancing art with commerce: movie studios, fashion design firms, and luxury goods manufacturers struggle with the same thing. . BMWs fanaticism about design excellence is matched only by the company's driving desire to remain profitable. And those objectives have required them to develop a unique set of operating principles (Bangle 2001). Until today, BMW stands by three solid principles to maintain the quality of its products: protecting the creative team, safeguarding the artistic process, anThe measure of success There exists a large disagreement about which companies are successful. Yet, whatever the criteria of success are, everyone seemed to be referring to the same companies over and over again: Hewlett-Packard, Microsoft, Marks and Spencer, BMW. These different opinions on how success should be measured were partly the result of disagreement about how added value was created, but rather more the product of different views as to how, once created, added value should be used (Kay 1993). Successful companies, and successful economies, vary in the relative emphasis to be given to returns to shareholders, the maximisation of profits, and the development of the business. Different firms, and different business cultures gave different weights to these purposes. But the underlying objective of adding value was common to all. (Kay 1993). For its part, critical success factors that enabled BMW to compete in the global market seemed to lie in extensive, carefully planned, and targeted marketing campaigns. Below are some of their successful campaigns, most of which garnered recognition from prestigious bodies. Agency: Fallon Minneapolis Budget Range: $5-10 MM Percentage of Print in the Media Mix: 50-74% Objective: Further establish the BMW brand as The Ultimate Driving Machine by featuring the latest, highest-performing models and targeting specific audiences. Increase sales Target Audience: Primarily men 35 to 54 who take great joy in driving and are looking for a pure performance experience behind the wheel. They are both young and young at heart and have an energetic approach to life. They actively seek out new experiences and information. How Magazines Were Used: All BMWs are built to be the Ultimate Driving Machine, but each Series has its own unique audience. Magazines allowed BMW to deliver an umbrella brand message while narrowly targeting the consumer segments that best aligned with each Series. Results: The BMW 6 Series exceeded its 2004 sales goal by 17% through December (goal: 7,000 units; number sold: 8,198) Through June 2004, after 88% of the print media had run, BMW 7 Series were up 3 % versus yearly average Industry Awards: 2005 Kelly Awards finalist Source: http://www.magazine.org/Advertising_and_PIB/case_studies/index.cfm? CaseStudyID=8 Agency: Merkley Newman Harty Partners

Budget Range: Under $10 MM Percentage of Print in the Media Mix: 75% Unit Size: Spreads and Pages Media Mix: Case studies that are magazine dominant, 75%+ of total budget Objective: Build sales with BMW loyalists and prospective competitive riders by promoting the brand as a legitimate alternative to key, already established, competitors Target Audience: Riding zealots of all dimensions and experience BMW loyalists and prospective competitive riders How Magazines Were Used: Leverage the entire magazine spread to powerfully zero in on the most profound truths about motorcycles and the people who love them - both visually and verbally Results: 2002 Tracking Study reports: 50% increase among those "extremely likely to purchase a BMW Motorcycle" 125% jump for BMW motorcycles on the rating "the brand for motorcycle enthusiasts" Among BMW's current customer base, loyalty has risen 53 Industry Awards: 2002 MPA Kelly Finalist CLIO Awards - Merit Award IAAA (Auto Awards) Bronze Award One Show, Print Finalist One Show/Integrated Branding Campaign Final Source: http://www.magazine.org/Advertising_and_PIB/case_studies/index.cfm? CaseStudyID=8 Agency: Crispin Porter & Bogusky Budget Range: $10MM - $20MM Percentage of Print in the Media Mix: 25+% Unit Size: Pages Objective: Launch MINI and establish it as an Icon in the U.S. by promoting it as an alternative culture of driving called "motoring" Target Audience: All athletes Excuse-prone athletes 18 24 How Magazines Were Used: Print innovations including branding tie-ins and content inserts leveraging the magazine environment. Results: A huge demand has been generated for the car, with demand exceeding supply and waiting lists at dealers throughout the U.S. Industry Awards: ADWEEK Media Plan of the Year Finalist MPA Kelly Award Grand Prize Winner Source: http://www.magazine.org/Advertising_and_PIB/case_studies/index.cfm? CaseStudyID=9 BMWs chosen strategy Few who drive a BMW car know what the initials stand for, or realise that the distinctive blue and white propeller badge reproduces the colours of the state flag of the State of Bavaria. The company subsequently diversified into what are now its two principal product ranges: automobiles and motor cycles. Today BMW is one of Germany's largest

and most successful companies (Kay 1993). The key to BMWs success is focused differentiation putting perceived added value to a particular segment warranting a premium price. According to Kay, the achievements of BMW are built on two closely associated factors. The company achieves a higher quality of engineering than is usual in production cars. While most car assembly has now been taken over by robots or workers from low wage economies, BMW maintains a skilled German labor force. The company benefits, as many German firms do, from an educational system which gives basic technical skills to an unusually high proportion of the population. Its reputation has followed from these substantial achievements. In this, BMW is representative of much of German manufacturing industry. Today, the BMW business is structured to maximize these advantages, Kay said. Retail margins on BMW cars are relatively high. The company maintains tight control over its distribution network. This control supports the brand image and also aids market segmentation. BMW cars are positioned differently and priced very differently in the various national markets. The same tight control is reflected in BMW's relationships with suppliers, who mostly have continuing long associations with the company. BMW's activities are focused almost exclusively on two product ranges - high performance saloon cars and motor bikes which reflect its competitive strengths. The company also uses the brand to support a range of motoring accessories. BMW is a company with a wellexecuted strategy. It is a company which came - after several false starts - to recognize its distinctive capabilities and chose the market, and subsequent markets, which realized its full potential. Its dealings with its suppliers and distributors, its pricing approach, its branding and advertising strategies, are all built around that recognition and these choices (Kay 1993). References Bangle, C. 2001, The Ultimate Creativity Machine: How BMW Turns Art into Profit, Harvard Business Review, January 2001, Vol 79, No 1. BMW 2005, Interim Report. Available at: www.bmw.com Bowmans strategy clock, available at: http://www.marketingteacher.com/Lessons/lesson_bowman.htm Business and Economics Research Advisor 2004, The Automotive Industry. Available at: http://www.loc.gov/rr/business/BERA/issue2/industry.html Chandler, C. n.d. Globalization: The Automotive Industrys Quest for a World Car Strategy. Europa Trade Issues 2005, Automotive Sector, Sectoral Issues. Available at: http://europa.eu.int/comm/trade/issues/sectoral/industry/auto/index_en.htm

Intel 2003, Driving Down Support Costs, Supporting Mobility: BMW Practices Proactive PC Replacement, Deploys Intel Mobile Technology. Available at: www.intel.com/go/intelsolutionservices/ Kay, J. 1993, The Structure of Strategy, in Business Strategy Review. Available at: http://www.johnkay.com/strategy/124 Magazine Publishers of America 2005, BMW Brand Print Campaign. Available at: http://www.magazine.org/Advertising_and_PIB/case_studies/index.cfm? CaseStudyID=96 Magazine Publishers of America 2005, Mini Cooper Lets Motor. Available at: http://www.magazine.org/Advertising_and_PIB/case_studies/index.cfm? CaseStudyID=9 Shimokawa, K. n.d., Reorganization of the Global Automobile Industry and Structural Change of the Automobile Component Industry.


Like clockwork, BMW is rolling out a new model every three months as it guns for the top spot among premium carmakers. But will the brand suffer?
The lofty new modern art museum in Munich boasts a world-class collection of art, design, and architecture. But on May 19, the specially invited guests weren't there to gawk at the Picassos and Mirs. They were assembled to appraise the art Bavarians love best: The latest model from Bayerische Motoren Werke. More than 100 German car dealers crowded around the revamped 5 Series sedan, the heart of the BMW franchise. They gazed approvingly at the sleek surfaces and listened as engineers described the tight handling of the new steering and stability systems. Looming over the proceedings was a 10-meter high sculpture celebrating the beauty of auto design, created by none other than Christopher Bangle, the controversial American designer of BMW's new look, and godfather of the latest 5.

Super-theatrical? Well, sure. But to the auto world, the latest Bimmer to hit the road is always a subject worthy of high drama. The Internet chat rooms of the global car-buff community have been buzzing about the fifth-generation 5 Series for months now. And they have a lot more to talk about than the latest rendition of BMW's biggest money-maker. The Munich company is rolling out a new or updated model nearly every three months through 2005 in a ramp-up more ambitious than anything the company has attempted before. "The [new] product initiative is critical to our future success," says BMW Chief Executive Helmut Panke. His goal: expand annual sales by 40% over the next five years, to 1.4 million cars, and beat out Mercedes-Benz (DCX ) as the No. 1 maker of premium cars in the world. "We won't give up, and we don't rest on our laurels," says the 56-year-old Panke. "We won't accept the position of No. 2." Panke, a nuclear physicist by training who is passionate about cars, is pushing BMW into high gear. If the accelerated rollout works, BMW's new raft of models will power the carmaker to a new level of prominence and profitability in the global industry. But as factories ramp up production levels and juggle an increasingly complex variety of models, BMW will have to fight harder than ever to keep its margins and maintain the quality that underlies its success. It all depends on how BMW's vaunted engineers and workers respond to the challenge. The expansion is well under way. In January, the company unveiled the new $377,760 Rolls-Royce Phantom, for which BMW is still building an exclusive dealer network. The $37,760 Z4 roadster, which arrived in the U.S. at the end of 2002, hits European showrooms this spring, together with a diesel version of the Mini, the old British subcompact that under BMW's ownership is fast becoming a cult car. Next comes the 5 Series sedan, which goes to market in July. In the fall, the X3, a downsized sport-utility vehicle, makes its

debut. At yearend, a revival of the high-performance 6 Series coupe hits the road, featuring some of BMW's most powerful engines. "The year 2003 is very, very critical for BMW," says Christoph Strmer, senior analyst at Global Insight Automotive in Frankfurt. So is 2004. In the fall of that year, dealers will get their first deliveries of the new 1 Series subcompact that will go head-to-head with the Audi 3, the Mercedes A-Class, and the high-end versions of Volkswagen's Golf. Next year, BMW will introduce a 6 Series convertible and a station wagon version of the new 5 Series. It's a high-speed shift from a carmaker that 10 years ago churned out just a handful of models -essentially the 3, 5, and 7 series. But remaking BMW became an imperative in the 1990s as the global auto market fragmented into hot new niches, and demand for luxury sedans -- the company's core business -- started to shrink as a percentage of total auto sales. "We can't make cars anymore that are three differently sized slices of the same sausage," says Panke. What's more, Panke and his top officers are betting BMW's new-model momentum will propel it past rivals. The Bavarian giant has already overtaken Mercedes-Benz in the all-important U.S. market, with models appealing to a wide swath of X- and Y-generation managers, entrepreneurs, and professionals. "BMW is the brand people aspire to own. When people get to the point they can afford a luxury car, they buy a (BMW) 3 Series," says George Peterson, president of AutoPacific Inc. in Tustin, Calif. "Mercedes is much further down the list and slipping." BMW is also overtaking Toyota Motor Corp.'s luxury brand Lexus as the premium-car leader in the U.S. While the two rivals ended 2002 neck and neck, BMW has outsold Lexus for the first four months of 2003 (table) -- a quantum leap compared with the early 1990s, when the Japanese took the U.S. market by storm. So far, BMW has steered its own redesign deftly. Despite a 53% increase in research and development and a 75% increase in capital expenditures over the past two years, BMW's net profit last year still rose 8.3%, to $2.36 billion, while revenues climbed 9.9%, to $49.5 billion. Operating margins, at 8% in 2002 and 8.7% in 2001 -- the heaviest years for investing -- were again among the highest in the industry. Lehman Brothers Inc. auto analyst Christopher Will expects the new-model push will generate a 20% rise in revenues next year. But can Panke keep his highly tuned company on track as it accelerates? "The core strength of BMW will be challenged," says Peter Soliman, vice-president at Booz Allen Hamilton Inc. in Dsseldorf. Management is being stretched to the limit, as BMW builds a new, $1.5 billion factory in Leipzig at breakneck pace. The Leipzig plant, slated for inauguration at the end of 2004, will employ 5,500 workers: the first 400 are already being trained in BMW's complex production methods. Few expect a major product blunder from the company's highly esteemed Bavarian engineers. Even the top-of-the-line 7 Series sedan, which at first raised howls of criticism for a provocatively imposing trunk design and for its complicated electronic information system, has outsold its predecessor during its first full year on the market. However, many are betting that BMW's vaunted profit margins will take a hit, at least in the short run. Although Panke vows earnings will be flat in 2003, analysts warn that they could slip by as much as 10%, as marketing costs peak this year on top of higher R&D spending. Panke's bet assumes turbocharged growth in the second half, prompted in part by the new 5 Series. The growing strength of the euro also poses a risk to BMW's dollar-denominated earnings. The company is hedged nearly 100% against its dollar risk this year and 60% for 2004 -- but only 30% for 2005. The more pressing question: Can an ever-bigger BMW maintain the consistently high returns it once achieved with its exclusive portfolio? For starters, small cars such as the Mini, launched in 2001, and the 1 Series subcompact typically earn lower margins than do midsize sedans and luxury limousines. "Compared with volume producers, BMW's manufacturing costs are much higher, its product development process more costly, and its purchasing costs higher," warns Goldman, Sachs & Co. analyst Keith Hayes in a recent report. Reflecting these risks, BMW shares have slid 41% from a year ago, to $32. Chief Financial Officer Stefan Krause insists BMW will wring cost savings on the 1 Series to maintain its high margins. As for the Mini, he says profits are "way beyond our forecast," thanks to unexpectedly strong sales of loaded models. Buyers are snapping up options from navigation systems to sunroofs, ponying up as much as $35,000 for the cheeky little car. But rivals are eager to point out other pitfalls. Robert A. Lutz, General Motors Corp. vice-chairman for product development, says Cadillac will not follow the path of German luxury brands in the march to obtain higher sales volumes: "After a couple of 1 Series, they'll have to bring in another brand on top to add prestige," he says. "The 1 Series will diminish the brand in the eyes of 7 Series buyers." Panke is adamant that future growth won't tarnish the BMW badge. "We are not competing with the mass market," he says.

BMW already may be showing some early signs of margin stress. Analysts warn the company has resorted to an aggressive leasing strategy to bolster sales in a weakening market in the U.S. and Europe, and to shore up aging models. That's standard industry practice, to be sure. But up to 75% of its luxury 7 Series sedans and 50% of the 5 Series are leased in the U.S. The company makes its profit by selling the car at the end of the lease to the leaseholder, a BMW dealer, or others. But there's a risk. If the sale price of the leased cars doesn't match BMW's high residual value estimate, then the company could suffer a lower return on those cars than it has traditionally achieved. And while BMW enjoys some of the highest residual values in the industry, often running over 60% for a threeyear-old car, it's unclear what will happen to values if an increasing number of leased cars hit the market down the road. Deutsche Bank (DB ) recently calculated an implied incentive of around $4,300 in the 7 Series lease rates. "The bottom line from our analysis shows clearly that in the U.S., BMW is currently offering the most aggressive leasing terms," says Deutsche analyst Christian Breitsprecher in a recent report. Not so, says BMW's Krause -- the leasing business is not being used to ratchet up subsidies on sales. For starters, he says, analysts' calculations use the original price for older models -- models that don't apply to BMW's revamped lineup. BMW is also redoubling efforts to keep costs down by sharing components across similar-sized cars, such as the 5 Series, the X5 and the 6 Series, as well as the 3 Series, the X3, and the 1 Series. The upcoming 1 Series will share about 60% of its components with the 3 Series. That will save costs, analysts agree, but if the cars are too similar, it could lead to a cannibalization of the sales of the higherpriced 3 Series. That's already happened at Volkswagen, which shares parts across a variety of brands. As costs come under pressure, preserving quality will be critical. In the first quarter of 2003, BMW's Munich plant won the J.D. Power & Associates Inc. Gold Plant Quality Award. But in the premium car segment, blunders infuriate drivers more and get big headlines. BMW found out the hard way in 2001 when it introduced an innovative knob called the iDrive to control a slew of functions on the dashboard. Software problems with the iDrive left many owners fuming as their new, $69,000 sedans sat in the shop for weeks for software upgrades. First-time customers have had their frustrations, too. Peter Walker, a 33-year-old Woodland Hills (Calif.) information-technology consultant, plunked down $62,500 for a sporty BMW M3 last year. But an engine defect put the car out of commission at 14,500 kilometers. The repair, together with minor problems with the clutch and pedals, plagued Walker for most of a year. A BMW-certified tow truck even broke the rear suspension control arms. "It was just one nightmare to the next," Walker says, requiring endless phone calls and e-mail with the company. "Even then they gave me a rebuilt engine," fumes Walker, who thinks BMW's model push may well have overextended the auto maker he grew up admiring. The real risk lies in the new models soon to hit streets around the globe. To speed the upcoming X3 to market, BMW outsourced development and production to Austria's Magna Steyr, a unit of Canadianbased supplier and engineering services giant Magna International Inc. Magna Steyr is dedicating an entire factory in Graz to making up to 150,000 X3s a year. Auto experts say the move could be an innovative alternative to building new plants, but warn that the strategy leaves BMW with only limited control over the final product. Despite the risks, many are betting the Bavarian champion can deliver. BMW's factories are considered the most flexible and most productive in Germany; its suppliers are the industry's best; and the workforce among the industry's most talented. BMW received more than 160,000 job applications last year for 3,500 openings. "Being able to attract and develop the best talent is BMW's hidden success factor," says Bernd Kreutzer, vice-president at consultants A.T. Kearney in Frankfurt. "It's hard to copy BMW because you can't copy culture." Step inside BMW's factories and research centers, and the high-energy buzz is hard to miss. Everyone knows the story of the engineer who in the 1970s cut a hole in the roof of a 3 Series car in his garage and cobbled together BMW's first convertible to wow reluctant board members. Production engineers in the paint shop recently racked up an impressive first with a new powder-based technology to apply the final clear coat on a car, providing a more perfect finish and better scratch resistance, and completely eliminating toxic waste. "All the Japanese and American auto makers have come to view it," says Walter Wimmer, head of the paint shop at the Dingolfing plant. BMW's obsession with performance and brand image helped the German auto maker close the yawning gap with Lexus in the U.S. in the 1990s. Munich headquarters read the message to improve quality and customer care loud and clear. BMW now offers a four-year warranty, including maintenance and service, in the price of the car, cutting out complaints that occasional technological glitches made the brand extremely expensive to maintain. "We took the pain out of owning a car," says Tom Purves, CEO of BMW North America.

Now BMW speeds customer feedback to headquarters faster than before. "[Quality] problems have to be solved in a matter of days, not months," says Norbert Reithofer, board member in charge of production. When the new 7 Series drew complaints for its befuddling iDrive, engineers went to work immediately on modifications now appearing in the new 5 Series, including a reduction in the number of control positions from eight to four and a handy reset button to return to the main menu. BMW also outfitted its dealers with kiosks and trained them to help customers master iDrive on dry ground. "We learned a lot from the 7 Series launch," says Purves. Development teams that pore over everything from such market feedback to new innovations are encouraged to engage in "friendly fighting" to decide the vital characteristics of a new BMW. The development of the new 5 Series shows the concept in action. As the team convened in 1998, marketers demanded more leg room in the back seat and more trunk space: Buyers of the old model had complained it was too small to hold several golf bags. The members of the engineering staff protested. Their goal was a car that accelerated faster and handled even more smoothly. Added weight and length were taboo for the gearheads. In the end, both sides won. The muscular-looking 5 Series is not only taller, longer, and lighter than its predecessor, it's packed with new technologies that boost engine power, torque, handling, safety, and fuel efficiency. Drive the 231-horsepower 530i 5 Series around a set of sharp curves and it grips the road more like a sports car than a sedan, with its smooth engine effortlessly delivering top acceleration and tight control. One technological coup: a system called "active front steering," which reduces the effort needed to turn at slow speeds and makes the steering more sensitive and agile at high speeds. The powerful front end was designed to appear deep and short to give it a "low, hunkered look," that matches the increased performance, says designer Bangle. A smoother integration of the trunk and angular rear lights gives the rear a racy attitude. BMW's brand image is tied tightly to such innovation. "BMW really captured the performance space in the market for themselves. They own it," says AutoPacific's Peterson. Sportiness and style made a convert of Debra J. Rosman, senior director of marketing for the NBA's Miami Heat. Rosman traded in her Lexus RX300 SUV for a BMW X5 with leather seats, wood trim, and an on-board computer. "BMW is hipper and cooler," says Rosman, whose monthly lease payments are well above the $450 she paid for the Lexus. Even rivals get the point. "I have to give BMW credit for consistency in their message," says Mike Wells, vice-president for marketing at Toyota's Lexus Div. The engine and styling variations offered by BMW are "clearly an advantage," he adds. Of course, Lexus is not about to concede. Neither is Mercedes, whose elegant E-Class still outsells BMW's 5 Series worldwide. Mercedes' Stuttgart designers gave the 2002 remake of the E-Class a sportier line, shooting for the more dynamic brand image that BMW has played to advantage. Then there's Audi, which aims to make its cars even more fun than Bimmers, and a whole new generation of models at Cadillac. It's going to be a helluva