BMW's eye on the future, more than hot air?

BMW has attacked the Federal Government's increase in luxury car tax announced in the budget last week, claiming that it is a tax on environmental technology. However, the extra government dollars are not deflecting it from rolling out more efficient powerplants, it seems.

Speaking at the launch of the 1 Series Convertible last week, BMW spokesperson, Toni Andreevski, said the rise in tax could increase the price of a $100,000 car by about $2500, penalising those who buy luxury cars for their cleaner environmental performance.

"The decision of the Federal Government sits at odds with its claims to have a broad environmental agenda," Andreevski says.

"When a lot of premium brands are introducing cleaner engines and new technology, for a government to come out with a policy that doesn't seem to tally with its own views on the environment, we need to make that clear to people," he said.

The proposed increase would lift the rate of luxury car tax (LCT) from the current level of 25 per cent to 33 per cent. LCT applies on cars valued over $57,123.

However, despite the heated rhetoric from the carmakers, Andreevski wouldn't confirm that the increase in tax would reduce sales volumes.

Realistically, any negative impact is likely to be minimal as potential BMW owners already spend more on options than a price rise might entail. Specify metallic paint on a 3 Series, for example, and it will cost you an extra $1600. A sunroof adds $2750.

Indeed, the new tax could result in stronger sales, at least in the lead up to its July 1 implementation, Andreevski suggested.

"Customers who buy in this segment are generally very up to date on current affairs and a lot them who are actively looking at purchasing car would understand the implications of the tax and might attempt to bring forward any plans they have to make a purchase in the next three months," he says.

There is no guarantee that BMW, or any of the carmakers affected by the tax increase, will pass on the full amount to customers. The competitive nature of the market might see some companies effectively absorb some of the tax increase (or alternatively adjust equipment levels to stabilise prices).

"The way it stands at the moment, when a government increases a tax prices go up, but we will obviously monitor the market and see how the marketplace reacts," Andreevski says.

Any slight increase in taxes in Australia though, is not going to deter BMW from continuing to invest in environmental technology and that is evidenced in the direction it is taking in its powertrain strategy.

BMW's latest engine development is increasingly looking at reduced capacity and turbocharging to help reduce fuel consumption and emissions while maintaining performance levels.

This strategy has been part of BMWs EfficientDynamics program that started in the early 2000s and last year resulted in a reduction of its average fleet fuel consumption by over 9 per cent. The program combines a number of technologies but has largely centres on the development of a range of direct-injection turbo powerplants. The cleanest of these, BMW's so-called High precision Direct Injection engines, are not available in Australia due to petrol quality issues.

We have, however, seen the introduction of the twin turbo petrol 3.0-litre straight six in the 1 and 3 series. The X6 (more here), due on sale in August, will also feature this engine alongside its 3.0-litre twin-turbo diesel with a new 300kW/600Nm twin turbo petrol V8 petrol engine to follow.

This twin-turbo petrol lineup is also expected to feature in the launch of the new 7 series early next year. The twin-turbo diesel will arrive in the 7 late in 2009.

A four-cylinder twin-turbo petrol powerplant is under development, while BMW also recently launched a twin turbo 2.0-litre four-cylinder diesel engine that is currently offered as a 123d in Europe. BMW says it is looked at introducing the powerplant Down Under (in 1 and 3 Series) although it is unlikely to arrive before the first 1 Series coupe's first upgrade -- perhaps as late as 2010/11.

So can we expect solely turbocharged engines from BMW in the future?
 
"BMW is not necessarily wedded to any technology, it is wedded to the right technology that fulfils what a customer expects of a BMW -- a sporty engine with strong performance but increasingly making sure it has low consumption and emissions," Andreevski says.

"We would look at various technologies but it is fair to say that turbo technology and reducing capacity currently is proving very fruitful for us."

Environmental concerns are also driving the development of an electric micro car under the auspices of the 'project i' team.

Speaking at the company's recent AGM, BMW CEO Dr Norbert Reithofer said a decision on such a car would be made before the end of the year. A zero emissions car (ZEV) is needed for forthcoming California legislative requirements, but he also suggested that a whole range of city cars could be developed with other fuel efficient powerplants.

"New drive concepts are handled by a new organisational unit called project i, which is our think tank for completely new, sustainable mobility concepts. This is climate protection BMW-style," Reithofer says.

These cars could form the basis of a much-touted fourth brand for the German company that would enable it to tackle the broader transport needs of "megacities" of more than 10 million people.

"With cities all around the world expanding into megacities, there is the risk of permanent traffic gridlock and ... the fact is: the traffic sector will face further regulation as a result of international efforts to improve climate protection," said Reithofer in a recent speech.

"We already focus on these challenges today, by adapting our operations and activities accordingly.

"In the future, this will become even more of an issue. Having said that, one thing is true: Simply carrying on with business as usual is not an option. The world is changing, so we need to change as well." 

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