This is the SWOT analysis of BMW or Bayerische Motoren Werke AG which is a German multinational company in the automotive industry. BMW brand manufactures luxury vehicles and motorcycles. BMW Group was founded in the year 1916 as an aircraft engine manufacturer. In the earlier years, BMW was set up as aGmanufacturer of aircraft engines.
BMW is headquartered in Munich, Germany. It produces motor vehicles in Germany, China, Brazil, Mexico, India, South Africa, United Kingdom, Netherlands, and the United States.
Autonomous vehicles are branded under BMW and Rolls Royce, while motorcycles are marketed under the brand BMW Motorrad. In 2017, BMW was the 14th largest motor vehicle production company in the world, having produced about 2,279,503 vehicles. BMW Group has a significant history of motor sports, mainly in sports cars, touring cars, and the Isle of Man TT.
BMW also started its operations in India, its manufacturing plants being in Chennai and its warehouse in Mumbai. BMW India is a BMW Group subsidiary, with Vikram Pawah being the President and CEO of the company.
Owing to the BMW Group history and its excellent business description in the automotive industry, let us discuss the SWOT analysis of BMW.
SWOT analysis of BMW helps the company to analyze its business model and come out with any reformation to increase the revenue. It highlights its strength, weaknesses, opportunities, and threats.
Strengths in SWOT Analysis of BMW
Strengths in BMW SWOT analysis are the internal factors that project the various key points of the company that has got it to this level.
1. Most Valuable Brands
BMW is the third most valuable autonomous vehicle brand in the world. It is worth about US$41.5 billion. Forbes has placed the BMW brand name as the second most valuable automotive company in the world. Brand value is related to brand recognition, and the BMW brand is the most exciting car and is more identified in autonomous vehicles. The company produces perfect engineered vehicles, luxury cars, and many more. Its high brand reputation is a strength of the brand and helps the company to introduce many products and services.
2. Rich History
BMW has about 100 years of experience in automotive manufacturing and it is one of the most exciting cars that people love to drive.
3. Excellent Advertising
The company was regarded as one of the luxury brands through its creative promotional strategies. The brand also has a strong presence in the digital media on Twitter and Instagram. BMW has huge followers and the company makes use of these channels for various company promotions using superior content.
4. Huge Workforce
BMW’s main strength is its huge workforce. The company has about 100,00 highly trained and skilled workers. Its huge workforce work in about 100 countries. to differentiate BMW’s service from its strong competitors.
5. Diversified Revenue Streams
BMW does not always depend on its home market or only a few markets to generate its revenue. Its main market share is in China, in terms of the number of vehicles, where BMW sold about 463,000 vehicle units. It also has a huge market share in other countries including the USA, Germany, Great Britain, France, Japan, and Italy. Its diversified revenue stream is a strength as even if the market falls in one region, it can sustain itself.
6. China’s Strategic Partnerships
China is the world’s largest automotive market having sold about 25.1 million units sold in the year 2015. China is also the largest BMW autonomous vehicles market. Hence, BMW’s success in China is dependent on its strong partnership. Due to this strong market presence in China and partnership, ensures success for the company along with great future sales.
7. Perfect Engineering
BMW mostly competes in the luxury car segment having competitors Mercedes, Lexus, and Audi. Its cars use the latest technology with perfect engine building, that focuses more on luxury and exceptional comfort. Its cars also support a perfect quality build.
8. Electric Vehicles and Hybrid Cars
In 2013, BMW releases its first electric car, and later on it became the third best-selling electric vehicle producer in the world. In 2014, BMW launched a new i8 plug-in hybrid vehicle and ventured into plug-in hybrid vehicles (PHV) markets. Over the years it introduced an extra four PHVs to its existing fleets and currently it provides one electric vehicle and 5 PHVs. Its entry into electric vehicles and hybrid cars is its strength.
9. Luxury Brand
BMW is a more reputed brand in the luxury auto industry and this is a strength of the brand. Its cars are loved by many people for their luxury driving. It is one of the premium brands and it is associated with a class. BMW has excellent driving features that attract all BMW drivers. Its tagline ‘Ultimate Driving Machine’ is apt for the brand.
10. Clear Strategy
BMW has set a clear strategy to meet further challenges. Its strategy provides clear directions on what the company should focus its efforts on. The plan touch upon what BMW operates and should concentrate on. Its main goals are:
- E-mobility – where BMW focuses on hybrid and electric cars
- Autonomous driving – transition to autonomous cars
- Mobility services – to leverage the potential of digitization
Its well-defined goals and focus are its key strengths.
Weaknesses in SWOT Analysis of BMW
Weaknesses in BMW SWOT analysis are the internal factors due to which the company’s performance is reduced.
1. Poor Brand Portfolio
BMW’s automotive portfolio contains only three various brands. They are BMW, Mini, and Rolls Royce. Considering its sales, BMW’s revenue and its major automotive sales are only BMW cars. The company is mainly dependent on luxury BMW cars for its revenue. Due to its heavy dependence on one car model, it is a weakness for the brand because if that segment goes down, it will hit its revenue. Also, the company’s portfolio is toward cars and it does not pick up any other automotive vehicles. A Poor portfolio is a disadvantage to the company.
2. Increasing Debt Levels
BMW has high debt which is noted in its history. Its debt was more during the years 2014 and 2015 due to its large investments in various technologies it worked as automated driving and electric vehicles. Having huge debt limits a company’s ability to invest in research and development. Also, it will not be able to enter into costly acquisitions that will help the company to grow faster. This situation is a weakness for the brand.
3. Heavy Maintenance
BMW vehicles are tough, expensive, and complicated to maintain. It incurs a huge cost for its maintenance. As it runs with sophisticated engineering systems, it demands specialized mechanics and specific dealers to maintain the vehicles. This is a weakness for the brand as on top of spending a huge amount for BMW vehicles, there is also an associated cost associated with it.
4. Cheaper Models
While BMW cars fall under the luxury segment, few of its cheaper models like the X1 SUV would dilute the brand’s reputation. This is a weak point for the brand and the company should find ways to overcome this.
Opportunities in SWOT Analysis of BMW
Opportunities in BMW SWOT analysis are the external factors that project the areas where the company can get more revenue by including it in their business model.
1. Increasing Fuel Prices
Fuel prices are increasing every year and will see more increases in the coming years. Low fuel prices have seen more opportunities for BMW as there is an increasing demand for large vehicles like SUVs and pickup trucks. Many companies like Ford motor company, General motors company, and Chrysler have benefitted from this situation.
2. More Demand for Autonomous Vehicles
Currently, about 33 companies are working to create autonomous vehicles. Few companies like Ford, Google, and Tesla are in the testing phase, however, they have not started to sell the cars to the general public. It is quite tough to estimate its market value, but autonomous vehicles will become a huge success for the automotive industry. BMW should speed up the autonomous vehicle development and enter into more research and acquire the right skills so that they can release it on roads soon.
3. Frequency of New Model Release
BMW should increase its frequency of releasing new models for ultimate driving machine to meet people’s expectations. Upgradation of existing models should be looked into carefully by incorporating the current technology. BMW owners wait for any new upgradation and the company sees a huge opportunity on increasing the frequency of new model releases.
4. Expanding in Emerging Markets
Future growth of auto sales is seen in developing economies. By investing in emerging markets, BMW can position itself to take this opportunity. Various markets can afford this brand and might see more sales when BMW ventures into such markets.
5. Weakening Euro Rates
Most of BMW’s revenue comes from European countries, where the only currency is Euro. Hence, there is little impact on the company’s revenues with the Euro exchange rates. This is an opportunity compared to other brands and the company can make use of this opportunity to increase its revenue and sales.
Threats in SWOT Analysis of BMW
Threats in BMW SWOT analysis are external factors that cause harm to the brand and hurt its reputation.
BNW’s competitors are a threat to the brand. Competition in the automotive companies is increasing always due to more vehicle production, frequent technology updates, and new entrants. BMW has many competitors like Tesla, with its electric cars that are a threat to BMW to compete and take over the electric car segment. Also, Google is trying to develop self-driving cars is also a threat. The top competitors of BMW are Mercedes Benz, Audi, Toyota Motor Corporation, Volkswagen, Nissan Motor Company, Hyundai Motor Company, Honda Motor Company, and Daimler ag.
2. Changing Government Regulations
Many governments across the world are aiming for green technology and are encouraging fuel-efficient vehicles. Such environmental initiatives may increase the company’s production cost and might impact the overall revenue. This is a threat to the brand to fit into a highly competitive market.
3. Decline in US Automotive Market
Sometimes the US market sees a decline in the automotive segment, while in some years there is a rise. However, BMW is influenced by such ups and downs, which is yet another threat to the brand.
Table of Contents
- Strengths in SWOT Analysis of BMW
- Weaknesses in SWOT Analysis of BMW
- Opportunities in SWOT Analysis of BMW
- Threats in SWOT Analysis of BMW