B M W. Those 3 letters have been a mark of prestige and status for 40 years in the US and even longer elsewhere. But what you don’t know is how close we came to losing this Bavarian Icon.
BMW got its start during WW1 making aircraft engines. The Treaty of Versailles, however, banned Germany from having an aircraft industry. As a result, the company diversified first into motorcycles and then into cars.
During World War 2, the company was a huge supplier of aircraft engines for the Luftwaffe (many built, sadly, by slave laborers).
After WW2, the company was in shambles, literally. Their factories took big poundings from allied bombers and some were unfortunately located in the Soviet zone. BMW found itself among the unlucky German automakers. VW got lots of money from the Marshall plan and was producing the perfect car for the austerity era. Mercedes Benz’s plants suffered limited damage and none were located in the Soviet Zone. Opel had the backing of its owner, General Motors.
BMW muddled through the 1940s on economy cars and motorcycles. Their factories in East Germany went rogue and began producing cars and selling them under the BMW name. Munich sued and won that case and the communist Bimmers were then sold under the EMW name. When they got aid through the Marshall plan, they decided to engineer a new luxury car, the 501. But many catastrophic errors ensued.
They hired the Italian design house Pininfarina to come up with a design for their new car. The result was a very handsome shape that was just right for the 50s. And as you probably guessed, their response was…
…”nein, nein, nein, vee shall make it look like a Gestapo squad car.” It looked positively ancient next to the all conquering Mercedes Benz. Worse, those “baroque” curves were very expensive to manufacture.
1953 brought a depressing sign of the company’s finances. They started producing their own version of an Italian bubble car known as the Isetta. With a 12 horsepower engine in the back and a door at the front, it was just sad. Sales were strong at first but quickly floundered as West Germans became wealthier and decided they wanted a real car. That same process also hurt motorcycle sales.
1956 brought 2 more costly errors. The 503 and 507 were a pair of stylish V8 powered roadsters. It was hoped they could tap in to the lucrative US market. But they were so horrendously expensive compared to the Mercedes 300SL and 190SL, that hardly any were sold.
By 1959, BMW looked screwed. That December, the board came very close to agreeing to a buy-out deal by Mercedes. That’s right, Mercedes Benz came this close to buying out the company that would become its fiercest rival. But then, at the last minute, a group of shareholders, dealers, and employees audited the numbers presented by the board and found they were manipulated to make the company’s situation look worse than it was. That infuriated Herbert Quandt, who owned 30% of BMW’s stock and he objected to the merger. His impassioned appeals won over everyone and Stuttgart’s bid was rejected. And Quandt correctly noted that there was a ray of hope…
That ray of hope was the small rear engined 700 that had been unveiled at the 1959 Frankfurt Auto Show. Its sales figures had been very good in the months between its launch and the time the Mercedes bid was considered. The 700 would save BMW from bankruptcy. Quandt expanded his holdings of the company to 50% as a show of confidence.
1962 brought the Neue Klasse sedan and stylish 3200CS coupe. They made it clear that BMW was here to stay.
56 years later, BMW is a massive corporation with an expansive line of sports sedans, luxury barges, grand tourers, SUVs, and even electric cars. They also own Mini and Rolls Royce. Who would’ve thought that such a wildly successful business empire came so close to never existing?