Over the last 100 years, BMW has transformed from a struggling airplane engine company to being the manufacturer of some of the most highly coveted luxury vehicles in the world. The company has witnessed some of the darkest times in European history but has emerged as a strong, stable representative of quality German design and engineering.
During its transformation from a company owning only one small production facility near Munich to a global organization owning 30 production facilities in 14 countries on 4 continents, BMW has changed greatly. The organization has diversified, taken on social issues and become one of the major sponsors of professional golf.
BMW has proven that one of the best ways through adversity is diversity and that mantra will continue to propel them into the future. The following article follows the history of BMW from its foundation in 1917 to its present global operations.
In this article, we explore several important development stages of the BMW by walking through sections: 1) foundation of BMW, 2) BMW during World War II, 3) BMW during 1970s, 4) turn of a new century, and 5) the millenium.
FOUNDATION OF BMW
BMW was the product of three manufacturing companies that became Bayerische Motorenwerke in 1917. Rapp Motorenwerke and Bayerische Flugzeugwerke were separate companies until the year 1918 until they were merged into a new public limited company. In 1918, Rapp Motorenwerke had been restructured and taken on the name BMW when it absorbed the struggling Bayerische Flugzeugwerke (BFW).
1) Rapp Motorenwerke
Rapp Motorenwerke GmbH manufactured aircraft engines in Germany at the beginning of the 20th century. It was founded by Karl Friedrich Rapp in 1913. The company suffered during the early years of World War I until it was ordered by the Prussian army to produce 600 aero engines. This order saved the company from collapse. Soon after, the founder, Karl Rapp was forced out of the company. This prompted a restructuring that led to the name change to Bayerische Motorenwerke GmbH. Newly restructured Bayerische Motorenwerke was the first company to use the moniker BMW.
2) Bayerische Flugzeugwerke
Gustav Otto, a Bavarian aviator, founded the Gustav Otto Flugmaschinenfabrik in 1913 near Munich. Because of unnamed issues in the quality of their products, the company was not ordered to provide armaments to the Prussian military during World War I. The company suffered financially before it was purchased by investors and closed in 1918. After its closure, Bayerische Flugzeug Werke (also known as BFW) was merged with the newly restructured Bayerische Motoren Werke to complete the transformation into BMW.
3) Fahrzeugfabrik Eisenach
Fahrzeugfabrik Eisenach was founded as a stock company in 1896. The company initially made bicycles but after two years in business they began to produce the Wartburg, a motor car. This was the third automobile manufacturer to be founded in Germany, the first two being Daimler Motoren Gesellschaft and Benz & Cie. The company was acquired by BMW in November 1928. This acquisition contributed to BMW’s shift from manufacturing airplane engines to creating civilian automotive vehicles.
The first BMW logo was created in 1917, and it includes the colors blue and white which are the Bavarian state colors. The logo was reimagined several times throughout the years, but it still retained its basic form – including the blue and white colors. Many people believe that the alternating colors in a circle are an interpretation of an airplane propeller. In fact, the BMW logo was an interpretation of Karl Rapp’s former logo. The letters ‘BMW’ are arranged similarly to how Rapp’s original logo was designed.
Rapp Motorwekre struggled severely because of quality issues until halfway through World War I. When the Prussian army ordered 600 aeroplane engines from Rapp Motorwerke. Overnight, the company went from being on the brink of extinction to genuinely contributing to the German war effort, and this allowed them to acquire BFW in 1918. Two years after the end of the war, in 1920, Camillo Castiglioni, an Italian-Austrian financier with a passion for aviation, injected capital into the company and gave it a new life. Camilo Castiglioni was the wealthiest man in Central Europe during that what period. He is widely known for having owned over 170 different companies. He is often recognized for having provided the financing and guidance BMW needed to become the successful automotive manufacturer it is today.
In 1922, the company relocated the production center to the Oberwiesenfeld airfield near Munich. These new headquarters would become the parent plant for the entire BMW group. Today, the Munich headquarters employ 9,000 employees who make over 200,000 cars every year.
In 1923, BMW expanded its operations from aeroplane engines to motorcycles. They announced their first motorcycle that would be called the R32. This was a big step for the company because it has previously only made motor engines and not entire vehicles. BMW created a motorcycle design that was so efficient that the 1923 concept plan is still used in modern BMW motorcycles.
In 1928, BMW began working on their first car after they purchased Fahrzeugfabrik Eisenach, the third automobile manufacturer established in Germany. Cars were not produced in the Munich production center. Instead, the company continued to use the former Fahrzeugfabrik Eisenach plant located in Thuringia region of Central Germany. The first car manufactured by BMW was a design borrowed from the Austin Motor Company. It was not until 1932 that BMW utilized its own designs and built its first car.
BMW DURING WORLD WAR II
During World War II, BMW manufactured war materials for the German military. This was not uncommon as most of the manufacturing facilities, and production plants in Germany came under the control of the government following the Nazi invasion of Poland. During this time, BMW was devoted almost entirely to making aircrafts for the German air force and motorcycles for the German army. Civilian automobile production came to a complete stop until after the war.
BMW had a dark history during the Second World War. To keep up with production demands of the German military, BMW began to employ foreign workers in the year 1940. These workers worked on the factory floor taking over the roles that had been left open by German men who had been drafted into the military. These workers were not enough to keep up with the required pace of manufacturing. Beginning in 1942, BMW began to employ POWs from Eastern Europe as well as forced laborers from Western Europe. These workers worked alongside prisoners from Nazi concentration camps. All of the workers in these plants worked in conditions that are considered to be inhumane. Suitable working conditions were sacrificed for efficiency. BMW has publically recognized this history and has expressed sincere regret over the fate of the workers in their plants during this tragic period.
Because BMW provided armaments to the German military, the Allied forces took control of each of the BMW plants and dismantled them. To prevent the total destruction of their company, BMW began to produce pots, pans, and other kitchen utensils until they could once again produce motorcycles and automobiles.
All BMW plants were dismantled by the Allies following the war. BMW had little to no influence over its organization at its Munich plant until 1949. In the Allach plant, BMW was not allowed any power until the year 1955. As a part of war reparations, many of the machines in the Munich plant were taken apart and then shipped overseas as a part of Germany’s post-war reparations.
BMW – POST-WAR REBOUND
Rebounding from the costs of the post-war reparations was not an easy task for the German economy or its industry leaders. Thankfully, the costs of World War II did not lead to the same economic instability that followed the Treaty of Versailles at the end of World War I.
In 1951, BMW was able to produce its first automobile since the start of the war. The car was called the 501. The 501 was a large saloon vehicle that could seat as many as six people comfortably. Although it was designed to be a luxury car, it did not succeed in the luxury market. However, it did play an important role in re-establishing the company’s reputation as one of the leading manufacturers of vehicles that were not only high-quality but also technologically advanced. The BMW 501 lived a short life and was taken off of the production lines in 1958.
After nearly 15 years of uncertainty, BMW was able to negotiate its independence for a second time in the year 1959. Daimler-Benz had its eye on acquiring BMW through a restructuring package, but the shareholders of BMW rejected this generous offer at the end of the year. With the help of financial assistance from the German government, BMW was restructured under new management in 1960.
BMW DURING THE 1970s
Without the pressure of a major European war, BMW was able to flourish through the 1960s and 1970s. The company focused on expansion as well as advancement throughout this period. Several of the modern arms of the company were also formed during this time. This period of growth resulted in the multi-faceted organization that BMW is today.
BMW gained a new kind of independence in the year 1971 when it established its own financial subsidiary organization. BMW Kredit was established to finance the company’s growth as well as provide support for their growing number of dealerships around the world. BMW Kredit became the cornerstone in the emerging automotive leasing market.
The 1970s also saw a period of international expansion for BMW. In 1972, the company began work on its first ever overseas production plant. The plant is located in Rosslyn, near Pretoria in South Africa. The plant employs 1,700 employees and manufactures around 53,000 units of the BMW 3 Series each year. South Africa may seem like a strange choice for a company’s first foray into international production, especially during this period. However, the company worked hard to provide jobs during the unstable years of the breakup of Apartheid. The group took special care to enact measures against segregation, discrimination and unfair compensation in its factory. They also committed themselves to providing support to the local schools as well as cooperating with local agencies.
The year 1972 was a big year for BMW. The company also launched their BMW Motorsport subsidiary. BMW Motorsport brought a lot of recognition and fame for the manufacturing quality and power of their vehicles. The success of BMW Motorsport also influenced the company’s new directions. With such a popular subsidiary, BMW eventually began to focus on building sport vehicles for the average driver. BMW Motorsport was only the tip of the iceberg. BMW Golfsport, Yachtsport and BMW Mountains have all inspired BMW’s impressive lineup of performance based vehicles.
The theme of progress continued in 1973 when the new BMW complex was opened in Munich. Work began in 1970 to build a new block of towers to house BMW rapidly growing team. Though it was a curiosity at the time, today the four-cylinder building has become an iconic part of Munich’s skyline.
After decades of the Munich arm of the organization accepting all of the sales responsibility, Sales Director Bob Lutz finally began to delegate by establishing sales subsidiaries. This event marked BMW’s transformation from German luxury automotive manufacturer to key world player. The first subsidiary opened in France in 1973 and soon after many countries began to open their own sales offices.
TURN OF A NEW CENTURY
As time progressed, BMW became known as a leader in both luxury and technology. Between their line of sports vehicles and their compellingly comfortable sedans, BMW had set a precedent across the world for what one manufacturer could achieve.
BMW became know for the extensive amount of research that went into designing and producing new vehicles. In 1990, BMW opened its Research and Innovation Centre in Munich. It was the first car manufacturer to open this type of facility. The facility continues to host over 7,000 employees. BMW relies on a variety of scientists, designers, engineers, managers and technical staff to work together to create their modern, luxury vehicles.
In 1994, BMW made it to America. The decision to build in the United States was made in 1989, but the facility was not open for business until the early 90s. The new plant simultaneously cemented BMW’s position as a global auto manufacturer whilst producing cars for one of its biggest markets. The plant was built in Spartanburg, South Carolina and was initially the dedicated production facility of the Z3 roadster. Today, the plant continues to produce the Z3 as well as the recent BMW X series. The X3, X5, and X6 are all made in the USA.
1994 continued to be a novel year for BMW when they purchased the Rover Group. Based in the UK, Rover manufactured iconic British sport vehicles like the Land Rover, MG, and the Mini. BMW had high hopes for the Rover Group but ultimately, their dreams were not realized. BMW eventually sold the Rover Group in 2000, but it retained the Mini model for its own use.
The decade continued with another major acquisition: the legendary Rolls-Royce group. In 1998, BMW negotiated the ownership of the brand as well as the naming rights for Rolls-Royce vehicles, though, the company was still owned by Volkswagen. In 2002, BMW finally earned full ownership of the company and celebrated by building a new plant in Goodwood, England.
After narrowly surviving one of the most tumultuous centuries in European history, the BMW group has spent the early years of the new century focusing on growth, change, and longevity.
The Mini was one of the only past reminders of the previous ownership of the Rover Group. It began to serve BMW well in the new century after BMW built a specialized plant to build the pint-size vehicles. Built in Oxford, England, the Mini became a global superstar after high demand required a 150% increase in production of the vehicle.
The move towards a fully global reach has continued into the 2000s as BMW opened up not one but three new production plants. The Rolls-Royce plant opened in Goodwood in 2003 followed by a brand new facility in Shenyang, China. BMW also opened another plant at home. The Leipzig plant was considered to be not only a creator of art but a work of art itself. The plant won the German Architecture award the year after it opened.
Today, BMW is governed by Strategie Number ONE. With a focus on growth, future, profitability and technology, BMW looks to the future of the automotive industry. After enjoying over a century of success, the leadership at BMW looking ahead to the year 2020. By 2020, BMW aims to be the leading luxury automotive manufacturer in the world.
BMW has seen both hard times and prosperous times throughout the 20th century. However, it is the group’s unstable beginning combined with its unending quest for self-improvement that has brought it into the 21st century as one of the top luxury automotive brands in the world.