At Beyond The KM, we are constantly inundated with letters from readers asking about car buying advice. One such letter read:

“Dear BTKM,

I want a car that costs $41,575, comes from Europe, and breaks my neck as I accelerate. Which car should I buy?”

Another recent letter read:

“Dear BTKM,

I need to spend at least $41,575 on a German car with two doors, an engine, and those great flappy gearbox paddles! Which car do you recommend?”

If you are one of those two readers, boy have we got the car for you. Welcome the 2007 BMW 335i Coupé. (more…)

Anyone looking for a hard-hitting commentary this weekend may be sad to know that the only posting is this video about the world’s most insanely expensive carwash. We just HAD to share it! Enjoy.

Sorry for the poor-ish quality.

It should come as no surprise to most that Renault’s number have been “off” in the EU. Many have argued that earlier success by Carlos Ghosn was due to lucky timing. At his arrival, Renault was in the midst of a product renaissance of sorts. The result of the company-wide product refresh was impressive sales, which included large profits. Fast forward to 2007 and the honeymoon is all but over for Ghosn.

Renault announced today that EU sales for March 2007 dropped 5.6% from March 2006. Sales for the Renault brand worldwide dropped 7.2%. Despite this, Renault still continues to have its largest market penetration in two EU countries, Romania and France.

While Renault struggled in the EU, the results were not so disappointing worldwide. In fact marketing and sales executives should be pleased that Renault has performed best in non-EU countries. On a Russian market that rose 11.5%, Renault confirmed its remarkable sales growth with a 63.2% increase thanks to the success of the Logan and the entire product line. Renault reported record sales in Algeria in the first quarter, up 29%. Renault continued to advance in the Americas, with sales rising by 10.6%. Sales were up 20% in Brazil and 75.1% in Venezuela. The biggest growth in the first quarter came from Argentina (+50.2%) and Venezuela (+87.8%).

The overall result may be disappointing to some at Renault but it is good news that European manufacturers can thrive outside of the EU. While the USA has long been a key market for the Germans, the French have long been outsiders in the USA, and show no signs of returning. Of course, Renault can always rely on Nissan if they need help across the pond. We would expect sales to be strong for the next months due to the latest product announcements, but Renault will have to improve in the EU, its core market, if it expects the year to go well.

Sources: Renault

Bugatti issued this press release in the last week:

Paefgen new President of Bugatti

Wolfsburg, March 13, 2007 – With immediate effect, Dr.-Ing. Franz-Josef Paefgen (60) has been appointed the new President of Bugatti Automobiles S.A.S. (Molsheim) and Bugatti International S.A. (Luxemburg). He succeeds Dr. Thomas Bscher, who leaves the company by mutual agreement at the end of the month.
Paefgen will continue to perform his duties as Chairman and Chief Executive of Bentley Motors Ltd. and General Representative of Volkswagen AG for Group Research and Motorsport in addition to his new responsibilities. >From 1980, he held various senior posts at Audi AG, the most recent being Chairman of the Board of Management from 1998 to 2002. Since 2002, Paefgen has, inter alia, been Chairman of Bentley Motors Ltd.
From 2003 to 2005, he was responsible for the development of the Veyron 16.4 as Chief Executive Officer of Bugatti Engineering.

Our analysis of this important appointment in twofold. First, it shows strength in that Paefgen has a background managing car firms that produce high-quality, ultra-expensive cars. Second, Paefgen’s success at Bentley proves that he can expand the product line for a small niche manufacturer. Bentley has very successfully done this in the past five years.

Why is this important? VW and Bugatti lose money on each Veyron sold, despite a US $1.3 million price tag. Still, Bugatti is critical to VW for two reasons. Firstly, it establishes them as a serious manufacturer of supercars and brings buyers to the VW group as a sort of flagship. Secondly, Bugatti serves as a critical test bed for VW group research and development. Serious R&D accomplishment that shows up in the Bugatti will eventually make its way into future Bentleys, Lamborghinis, Audis, and even VW-brand vehicles.

We should therefore expect to see further product development out of Bugatti in the form of a lower-priced more “mass-market” car (something with a production level of over 75 a year – the current production level for the Veyron). We should also expect some Veyron technologies in this and Lamborghini/Bentley models in the following years. This will serve, in part, to reduce the loss, a “sunk cost” technically, which has been observed at VW.

In our most recent posting we pointed out that Aston Martin was integral to Ford’s Premier Auto Group, not just because it represented Ford’s presence in the supercar market, but because it was also profitable.

Profitability is something that once eluded supercar makers such as Aston, Ferrari, and Lamborghini, even Porsche at times. We noted that Aston Martin is, according to Ford, now a profitable unit. As Ford does not publish profitability for each of the PAG’s units, we will have to take their word for it, but we do know they sold over 5000 cars in 2006.

Take a look at Lamborghini, which according to the company, pretax profits rose to €18.1 million in 2006. That’s a 4.5-fold increase from 2005 when profits were only €4.4 million. CEO Stephan Winkelmann has said, “We have a complete model range, which is the youngest we’ve ever had. We are now a real car manufacturer.” While the “real-ness” of Lamborghini’s product line may be debatable, they do have 10-cylinder and 12-cylinder models, the Gallardo and Murciélago, respectively. Both models feature a coupe and roadster version.

Part of this increase has been due to higher demand and production. In 2000, Lamborghini produced just 1 car per day, but in 2006 they had ramped up to 13 per day. This figure is still more than a bit shy of Porsche, but respectable for considering competitor Pagani has said it will make only about 20 cars for the year.

Doing very simple math, without consideration for one time write offs/sales, we can note the following per car sales for 2006:

Manufacturer	Profit (pretax)	Production (# of cars produced)	Per car profit
Lamborghini	€ 18,000,000	2095	€ 8,591.89
Ferrari	€ 183,000,000	5671	€ 32,269.44
Aston Martin	N/A	5000	N/A
Porsche	€ 1,390,000,000	86426	€ 16,083.12

Porsche is the most profitable auto manufacturer in Europe, but per car averages put Ferrari impressively on top. Aston Martin and Pagani do not post numbers officially, but Aston reports a profit, however small that may be. Bottom-line, money CAN be made in supercars!

Sources:

Bloomberg http://quote.bloomberg.com/apps/news?pid=10000080&sid=aLQlMBk2X4yM
Lamborghini
Ferrari
http://www.automotoportal.com/article/ferrari-annual-report-2006-impressive-growth-in-revenues-and-profits
http://www.autoblog.com/2006/07/04/aston-martin-makes-a-profit
Aston Martin
http://business.timesonline.co.uk/tol/business/industry_sectors/engineering/article681820.ece
Porsche
http://www.iht.com/articles/2006/11/15/bloomberg/bxporsche.php