Worst moment in BMW history.  How Mercedes missed a full-time opportunity

Worst moment in BMW history. How Mercedes missed a full-time opportunity

What would the mass market look like today if Audi and BMW had been owned by Mercedes for over 60 years? In April 1958, Daimler-Benz (owner of Mercedes) took over Auto Union – and therefore Audi – and a year and a half later was about to buy BMW.

What happened in the late 1950s that BMW almost lost its independence? If this had happened, would the Munich brand exist today?

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BMW makes a calculation error

The 1950s promised hope. Sales of BMW motorcycles went like gold, and the company celebrated the launch of its newest limousine. The luxurious model 501 presented in 1951 was supposed to be produced in the number of 22 thousand. units per year, which will provide money for further expansion of the range.

It’s hard to believe today, but at the beginning of the 1950s, BMW produced only one model of the car: the 501. So if the car did not reach the expected success, the manufacturer would have very little money for development.

Unfortunately, that’s what happened.

BMW saw the market wrong. In the 1950s, the economy of the Federal Republic of Germany grew rapidly and its inhabitants earned more and more income. Economic growth was driving the demand for BMW motorcycles, but German citizens could quickly afford something bigger: a car, albeit not as expensive as the BMW 501.

Photo: BMW

BMW 501 (1951-1958)

This was the fault of the Bavarian company: its only car was too expensive. In 1954, the average German officer would have to spend on it the equivalent of 50 monthly salaries. In other words: your total income for four years.

In addition, customers did not associate BMW with very luxurious limousines. Mercedes yes, BMW – no more. If the company showed a compact model instead of such an expensive car, it would make a lot of money.

The BMW 501 also had other problems. In the years 1952-1954 the car was only offered with a 6-cylinder engine 2.0 with 65 HP, very weak for a limousine weighing 1,340 kg. Reliability was also not his forte.

The situation was to improve the V8, built in just eight weeks. It didn’t improve. In 1955, the production of the 501/502 series was 5 times less than originally planned. In 1957 – already more than 10 times smaller (less than 2,000 cars instead of 22,000 cars).

In addition, the sales of motorcycles dropped significantly. In 1957, BMW produced only 5.4 thousand. two wheels, about 5.5 times less than in 1954.

Fortunately, in 1955 the range of BMW cars was improved with a second model. To this day, it is still the most amazing car in the history of the company.

BMW with one cylinder

BMW Isetta Standard (1955-1957)Photo: BMW

BMW Isetta Standard (1955-1957)

It is about the Isetta or small car that BMW has approved from the Italian ISO. The Bavarian company modernized the design and, above all, equipped it with its motorcycle engine. Unfortunately, it was another model that had nothing to do with BMW’s image at the time. Microcar got a 1-cylinder unit with a capacity of 245 or 298 cc. (12 and 13 hp respectively). The whole thing weighed 360 kilograms and rolled on 10-inch tires.

The BMW model was just as amazing. In 1955 it had only a small car (Isetta) and a luxury car (501/502). It is as if today Mercedes were only offering smart fortwo and S-Class.

In 1955, the BMW range consisted of only two cars: the compact Isetta (left) and the luxury 501/502.Photo: BMW

In 1955, the BMW range consisted of only two cars: the compact Isetta (left) and the luxury 501/502.

However, the BMW Isetta was successful. Time. The inhabitants of the United Republic of Germany got rich so quickly that they quickly lost interest in it. In 1957, the small car accounted for half of the company’s total sales, but in 1959 its production almost doubled, from 33.7 thousand to 33.7 thousand. units in 1957 to 17.5 thousand cars.

Demand for the BMW 600 slightly larger than the Isetta (two cylinders; 582 cc; 19.5 hp) collapsed further. In two years, the production of this model has dropped four times: from 27.2 thousand cars in 1958 to 6.8 thousand in 1959. Unfortunately, even in the best of times, Isetta and 600 did not make much money.

Obviously BMW didn’t have a mid-range car, but there wasn’t enough money for that. Negotiations with banks about the provision of loans continued, and the next two cars – 503 and 507 – also did not contribute much to the company’s coffers.

BMW 503 (1956-1960)Photo: BMW

BMW 503 (1956-1960)

Both were among the most expensive cars in Europe at the time. Both 503 (1956-1960; engine: 3.2 V8 140 hp) and roadster 507 (1956-1959; engine: 3.2 V8 150 hp) even more expensive than the legendary Mercedes 300 SL “Gullwing”. The average German officer had to work for 82 months on a BMW 503 (ie almost seven years), and for 507 – 74 months (more than six years).

Both models failed in the market. BMW 503 had 412 units, 507 only 253 units.

BMW 507 (1956-1959)Photo: BMW

BMW 507 (1956-1959)

BMW’s budget was also reduced by the costs of building the 700 model. This 2-cylinder car, only 354 cm long, was the best hope to improve the company’s fortunes, but the effects of its possible success would not be felt by the manufacturer until 1960. At the same time, it was 1959 and the crisis was at its peak. The future of the company was to be decided on December 9, 1959, during the general meeting of its shareholders.

What was to be done? There was a solution, but more extreme: BMW would be taken over by Daimler-Benz, the owner of Mercedes and… Audi. Audi?

Nine horrible hours

Auto Union was founded in 1932 as a result of the merger of four companies: DKW, Horch, Wanderer and Audi. And it was Auto Uniona that Daimler-Benz bought in April 1958. Contrary to appearances, the Stuttgart giant did not take over the Audi range, because it did not exist at that time. At the time, Auto Union only offered models under its own and DKW brands.

On December 9, 1959, BMW’s conference room was filled to the brim with shareholders large and small. The plan was as follows: Daimler-Benz would eventually become the largest shareholder of BMW. Now it was only necessary to pass the vote.

BMW 700 (1959-1965)Photo: BMW

BMW 700 (1959-1965)

The proceedings were stormy. The plan was opposed by some small shareholders, including some businessmen. Finally, after more than nine hours, the takeover project was rejected. It was agreed that BMW would leave on its own.

Herbert Quandt (second left)Photo: BMW

Herbert Quandt (second left)

The program was taken over by Herbert Quandt, who not only restored the beauty of the company, but raised it to its current height. A year later, in 1960, BMW was reaping the market success of the 700 model, and in 1961, at the Frankfurt Motor Show, exactly 10 years after the ill-fated 501, the company presented the 1500, a mid-range car. The car was so popular that every visitor to the show who wanted to get inside had to spend half an hour in line! This boded well for the future.

BMW 1500 (1961-1964)Photo: BMW

BMW 1500 (1961-1964)

Already in 1963, BMW sales were 2.5 times more than in 1959, in 1969 more than 8 times than in 1959, and in 1989 – more than 155 times more than 40 years earlier.

Mercedes sells Audi

In 1963, Daimler-Benz sent its main passenger car builder to Auto Union. Ludwig Kraus was there, among others to bring the Daimler engine design into production and use it for the new DKW. When its production started in August 1965, the car was already called Audi, thus becoming the first post-war car of the brand. Yes, the Audi engine was made thanks to Mercedes.

Audi from the F 103 series (1965-1972), i.e. the first post-war car of this brand (version 75 Variation in the photo).Photo: Audi

Audi from the F 103 series (1965-1972), i.e. the first post-war car of this brand (version 75 Variation in the photo).

Another thing is that Daimler-Benz was getting rid of the Automobile Union. A year earlier, in 1964, 50.3 percent. The shares of Auto Uniona were bought by a powerful company, the rest was bought in 1966. This company was Volkswagen.

What if?

Suppose BMW went to Mercedes and Daimler-Benz never sold Audi. What would be the state of each company today?

The success of the first Audi after the war (1965-1972) could lead Daimler to systematically expand the range. Audi, however, would not be the first car manufacturer. Within the Daimler Group, this role would belong entirely to Mercedes. The Ingolstadt company would therefore compete with Ford, Opel and Volkswagen.

And BMW? Daimler would not need a second premium company competing with Mercedes. Only motorcycles that Daimler did not produce could be manufactured under the BMW banner. BMW’s car factory in Munich would probably make Mercedes or its key components.

Could the BMW 700 presented in 1959 be the last car in the company’s history? We’ll never know. Fortunately.