Beware the Bargain BMW

When Bob Lutz speaks, we listen. How could we not? He’s an octogenarian who looks like a Nordic god and flies fighter jets. He’s also an automotive legend who had a hand in everything from the Dodge Viper to the Chevrolet Volt. And so it was no surprise that Lutz’s comments last week about Pontiac’s plans to introduce a line of rear-wheel-drive, cut-rate BMWs drew so much attention. “Pontiac was on its way back … we were embarked on a strategy of making Pontiac different from the rest of GM in that Pontiac would not get any front wheel drive cars,” the former GM product vice chairman told a forum at the Petersen Automotive Museum in Los Angeles, according to Autoweek. He added that the next G6 was going to share the Cadillac ATS’s Alpha architecture.

But Lutz’s plan for the brand would have failed. The key problem is the incompatibility of a volume brand and rear-wheel drive. So far this year, Dodge has sold about 80,000 rear-wheel-drive Chargers. Chevrolet has sold 140,000 front-wheel-drive Impalas. In the mid-size and compact segments, there are no rear-wheel-drive cars at all. The primary reason is interior room.

“Packaging is an issue for a big part of the market,” says Jim Hall of 2953 Analytics.

You have probably heard that few buyers care—or even know—whether their car is front- or rear-wheel-drive. That’s only half true. Buyers tend to want the most interior room they can get for their money and for the size of the vehicle they’re buying. Rear-wheel-drive, with its longitudinal engine and drive shaft, simply isn’t as space efficient as front-wheel-drive. That packaging disadvantage remains in a rear-wheel-drive vehicle that offers all-wheel drive. Check out the back seat in a Chevrolet Camaro or a Cadillac ATS or CTS. Pretty tight, no? It’s "the price you pay for having a car the way God intended it," a Cadillac engineer told me during the CTS’s reveal.

The reality is, not many are willing to pay that price. That’s fine for a premium brand, which can charge more for each vehicle. A hugely successful example is BMW, which makes a handsome profit off of what is still a relatively low volume of mostly rear-wheel-drive-based vehicles (close to $7 billion off of 1.8 million vehicles, globally, in 2012). Note that BMW’s own attempt to market a lower price, higher-volume rear-wheel-drive car, the 1-series, has been a failure. Its replacement will be front-wheel drive.

Lutz says Pontiac would have sold BMW-like vehicles for less money. Pontiac would have been hard pressed to match, let alone exceed, BMWs volume (that’s true even if we assume Pontiac would have shared product with GM Australia’s Holden brand). This leaves us with the question of how Pontiac, which Lutz says had been losing money for a decade, could possibly have returned to profitability with exclusively rear-wheel-drive cars. Lutz adds that the Pontiacs would have been “de-premiumized,” which would have meant basic interiors (see: Chevrolet Camaro) and the elimination of the lightweight materials found in the ATS and CTS. Where, one must wonder, is the market for heavy BMWs that lack either the prestige or the comfort of BMWs?

“This is a fantasy on Lutz’s part,” Hall says.

For the record, I enjoy this fantasy. I love Pontiac so much I once dragged a girlfriend to Norwalk, Ohio, in the middle of summer for the Ames Performance Tri-Power Pontiac Nationals (and met Jim Wangers!). I probably would have bought one of those rear-wheel-drive G6s. But you can’t build a brand on people like me or, for that matter, people like Bob Lutz.

Indeed, the Pontiac plan is pure Lutz: the man loves European-style performance cars and he loves moon shots. The notion that this dream was spoiled by the Federal government’s task force—who demanded Pontiac’s closure as a condition for a loan, according to Lutz—plays into his oft-repeated assertion that “bean counters” can’t be trusted. The thing is, automakers only have so many beans. And GM didn't need any more moon shots. It needed good cars. It now has them. That’s thanks in large part to the product-development culture Lutz instilled during his tenure, but it’s also the fruit of the tough changes the feds forced upon the company during its bankruptcy, including the elimination of Pontiac.

the_roadrunner
another ridiculous quote:  "So far this year, Dodge has sold about 80,000 rear-wheel-drive Chargers. Chevrolet has sold 140,000 front-wheel-drive Impalas. In the mid-size and compact segments, there are no rear-wheel-drive cars at all. The primary reason is interior room."False.  Back in the day when the Impala and its Dodge (and Plymouth) equivalents were both rear wheel drive, Impalas easily outsold Dodge and Plymouth competitors combined.  Chevy has a better brand, more established customer base and much better dealer networks.  One could easily argue that based on historical trends, the Dodge is doing far better than expected, especially give the Impala's excellent restyling.Interior room is not incompatible with RWD, just ask a Lincoln Town Car.  Or better yet, sit in the back seat of a Pontiac G8, which has better leg room than a Town Car.  The G8 is simply enormous inside.
the_roadrunner
"Where, one must wonder, is the market for heavy BMWs that lack either the prestige or the comfort of BMWs?"  Middle America, who can't afford BMW's but would love to have BMW performance at mass market prices.  Problem is you Automobile guys spend too much time in cars loaned to you free to get this basic fact.
the_roadrunner
Let's see.  In recent years, Pontiac introduced a G5 (FWD), a G6 (FWD)  and the G8 (RWD).  Today no one can tell you what a G5 is, the G6 is a $2000 used car on the discount lot, while G8GTs that are 5 years old can sell for almost what they cost new.  Guess which car spawned its own website and fan gatherings?  Only the almighty G8GT!  Lutz's plan was the only way to save Pontiac.  Let's hope GM dumps govt ownership and reinstitutes Pontiac under the Lutz plan.
the_roadrunner
The Pontiac G8 is proof the author is totally wrong.  Ask any G8 owner what he thinks of his (or her) car and the comments you get range from "Best car I ever had" to "I'm keeping this one forever" to "if GM made more cars like this, they would have never gone bankrupt".  The ATS's rear seat area can be fixed with just a 2 inch chassis stretch, GM is already testing a long wheelbase version.  This stretched ATS would make a Super G6.  Just because most cheap cars are front wheel drive doesn't mean a RWD car can't make it.  Dodge would be dead without the Charger and Challenger, the rest of their lineup has zero appeal.  Fact is in a crowded car market, being like everyone else is a recipe for losers.  Bob Lutz is right (as usual) and I will always have a soft spot in my heart for the godfather of my G8GT.
L. Morgan
The author's premise is fatally flawed for the simple reason that AWD vehicles are prevalent, and in some cases dominant, in the segments in question. Certainly the interior packaging issues for AWD cars are no less significant than the interior packaging issues for RWD cars.
BobL
The author is nuts.  The BMW 1-series is not a failure just because he says it is.  He provides no facts to backup his statement.
John Shea
Some front wheel drive cars, notably Audis, have longitudinal engines. In any case it makes little difference whether the V6s or V8s in most US market cars are mounted longitudinally or transversely. And virtually all front drive cars have central tunnels, even without optional 4WD. I've never heard of David Zenlea, Jim Hall or 2953 Analytics, whatever THAT might be, and I doubt I'll hear of any of them again. Bob Lutz is a very different matter, though I do disagree with him about 'depremiumizing', assuming he was paraphrased correctly. That sounds too much like the 'decontenting' that endangered Mercedes-Benz and GM itself in the past.
alera
I disagree with the article.  Pontiac could never successfuly compete in the crowded marketplace of generally excellent FWD mid and compact size sedans.  If they offered unique RWD products, they could really carve out a great niche and have it all to themselves.  With GM volume and clout over suppliers, the production costs should have been less than bmw's, and they would save on engeneering costs that could have been shared with Holden.  A rwd 3-series size car with their current 2.0T engine priced at $30K could have worked. If they managed to improve quality, they had a real potential with this brand.
Rich Trout
BMW=Handling and performance. Rear wheel drive is best for this. Cheaper BMW and American brand=Ready made market (UAW workers usually won't buy non-UAW built) . Dodge makes lousy vehicles, Ex. Challenger vs. Camaro or Mustang, theres a reason they're not selling as many vehicles as Ford or GM. People avoid buying BMW because of the high cost of repair parts and maintenance.  I can't believe a writer could get paid for such a faulty aricle on cars! Please hire me, I will work for half his salary, I'm sure as little reasoning that went into this article he could go to work for the President as a Car Czar-we both win! P.S. Bob Lutz (except for Volt, which was mostly for govt. mandate) PRETTY FRIGGIN' SMART (Jet fighter pilots who are not, do not get to be one and don't live long lives, lol)
the_roadrunner
@L. Morgan Excellent point.
John Shea
Amen! The 1-Series replacement is related to the Mini, itself a rather cramped car but a huge success for BMW.

rich58b
@John Shea One more reason the 1 series failed is that it comes only in a coupe and a convertable, and is too expensive. It costs roughly the same as a 3 series.
John Shea
@rich58b @John Shea In the USA maybe. Elsewhere the 1-Series is significantly cheaper than the 3-Series, comes as a three door hatchback and five door hatchback as well as the coupe' and convertible, and is quite successful.

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