BMW's Lime Rock Park M3, Lots More Minis, And Audi Cuts Itself Slack

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1st Gear: Lots More Minis Are On The Horizon
Britain's Press Association reports that BMW is investing another $387 million in its three Mini factories in the UK, with an eye to producing as many as 10 different Mini models over the next few years. It may expand production at the main Mini plant in Oxford, and BMW also says it may also contract to produce Minis at the NedCar plant in the Netherlands. The latest investment is on top of $774 million that BMW said last year it would invest in its three British plants. Harald Krueger, a BMW board member, said the Oxford factory would remain Mini's lead plant. "Just as Munich is the center of the BMW world, Oxford is and will remain the home and the heart of Mini," he said.

This is great news for Oxford's 5,500 workers, but there's another motivation here: Mini's expansion comes as Mercedes-Benz has its own aggressive plans for adding models, especially at the lower end of its lineup. The Mini move brings up a key question: how many Minis can BMW successfully sell? For generations, carmakers have been taking a successful product and spinning off iterations — think of the Model T, Jeep, and what Toyota is doing with Prius. And we've known for some time that BMW had ambitions well beyond the original Mini. It's risky, though, because Mini is so instantly identifiable in our heads as Alex Issigonis' little zippy car. Needless to say, the entire industry will be watching to see if BMW can keep that heritage in the nine other Mini models, or whether the adorable factor gets diluted.


2nd Gear: Audi Giving Itself More Time To Conquer The Luxury Car World
Reuters reports that Audi is cutting itself some slack on its march to become the world's biggest luxury brand. The news came in an interview that CEO Rupert Stadler did with Sueddeutsche Zeitung (which means Southern Germany Newspaper, in case you always wondered). Initially, Stadler had said he wanted Audi to be the top premium brand by 2015, but now he says Audi isn't in a rush take the crown from BMW. He's pushing back his target to no later than 2020 and says rather than get there quickly, his goal is "to seize the and secure the top position." Perhaps he'd heard about the lots more Minis. Audi is scheduled to release its first-half sales numbers on July 31. Stadler says they'll be "very good" but adds, "We, too, feel the road is getting bumpier."


3rd Gear: BMW Brings You The Lime Rock Park M3 Coupe
Getting back to BMW, the company is going to roll out the very limited edition Lime Rock Park M3 Coupe. Only 200 will be built, and they'll start at $70,995, including destination charges. Skip Barber, who owns Lime Rock, says in BMW's news release that it will be a "classic car for a classic track." Deliveries will begin in September. Barber helped outfit the Lime Rock Park edition, and racing driver Bill Auberlen took it through its paces at the track on July 3. Barber says the car, with a six-speed manual, is perfectly geared for the track. If one of you ends up getting this car, or takes it for a spin, we'd love to hear a first-hand report.


4th Gear: Pull The Covers Over Your Eyes, It's Earnings Season
The Wall Street Journal (sub. required) has a preview of the second-quarter earnings season, which begins this week, and it sounds like a lot of companies are headed for Audi's bumpy ride. The Journal notes Ford is among the companies that have already warned investors that profits will be lower than last year, in part because Europe is falling apart. This might be a good time to give you some tips on what to look for when you read car company earnings reports. First, and foremost, don't pay any attention to whether a company beats the analysts' projections. That's for people who are playing any blips in the stock price, which is why you'll see that in the first headlines. Through the years, I've seen companies beat estimates at 7 a.m. only to have their stock take a beating by the end of the day when everyone realized what was really in the numbers.

Second, forget all the ways that a company will try to spin its results, like leading the press release with operating income or by backing out a big one-time charge. You want to look at two things: the top line, which is revenue, and the bottom line, which is net income. You want to see year-over-year growth in both places, and conversely, if you see those numbers drop, it's a sign of trouble. Third, skim through the report and see where the company is doing business, and how its business in those regions is doing. For the U.S. car companies, that means the U.S., Europe and Asia, with Latin America also in the mix. There are more measurements to check out, and I'll be back later in the week with those.



5th Gear: Carlos Ghosn Says Bigger Isn't Better
The Harvard Business Review reports Carlos Ghosn recently shared some of his philosophy about "frugal innovation," which he's been implementing at Nissan and Renault for more than a decade now. Ghosn says car companies can no longer over spend or over engineer on its vehicles, and gave out four tips for for delivering more for less. First, create "good enough" vehicles that deliver value for the money, like the stripped down Logan, which has become Renault's best-selling car in Europe and many emerging markets. Second, foster healthy rivalry between global R&D teams. Ghosn said he asked three engineering teams in France, Japan and India to solve the same problem. The Indian engineers came up with a fix that cost one-fifth of the other teams.

Ghosn also is big on assigning work to partners in emerging markets, like the DOST pickup that is sold in India and has more than a third of its market. And Ghosn sends executives from his operations in Japan and France to places like India, Brazil and South Africa. He expects them to come back home with ideas for moving leaner and faster. A lot of what Ghosn talked about is wrapped up in a business principle called "jugaad innovation" which is increasingly being talked about in business schools. But it's interesting to see some real world examples.



6th Gear: Even Justin Verlander's Ride Breaks Down
Fox Sports Detroit has the story of Detroit Tigers' ace Justin Verlander's hellish trip to Comerica Park on Sunday. We got an inkling something had gone wrong when Verlander tweeted a photo from the side of I-75, which is not where you expect to find the American League MVP and Cy Young Award winner. Verlander, who was headed for the All-Star Game in Kansas City later Sunday, had to order a town car to bring him to the ballpark, which he says he often does when he travels. After 10 minutes in the car, Verlander said, the air conditioning broke down. He asked the driver to lower the windows, only they wouldn't open. Then the town car started to make some disturbing sounds, and finally, Verlander told the driver to get off the road. He found a ride to the park and has already tweeted from Kansas City, so he seems to be okay.


Battery Maker A123 Running Low On Cash [Reuters]

Ford Cautions EU On Free Trade Deal With Japan [Telegraph]

The Crazy All-Nighter At Chinese Car Dealerships [Bloomberg]

Kentucky To Offer Bigger Auto Industry Deals [Associated Press]

Heat Causes 1-94 Pavement To Blow Out [Kalamazoo Gazette]

Toyota Is Assembling Taxis In South Africa [MoneyWeb]

In keeping with our new discussion system, here's a place for you to own the floor. We're asking each day what you think about an issue that comes up in TMS.


Today, we'd like to know your view on the luxury car race. Does Audi have what it takes to become the world's biggest premium brand? Or, does BMW have a lock? What do you think of Mercedes' chances? Is there any hope Cadillac can become a truly global player? Remember there's no right answer or wrong answer. It's Neutral.


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