BMW crowds into rapidly expanding luxury SUV market

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BMW of North America's first sport utility debuts in a growing luxury segment attracting a number of new entries.

With the X5, the car marketer is entering the luxury SUV segment that, along with small SUVs, is one of the hottest in the industry, said Dan Gorrell, a VP at auto consultancy Strategic Vision.

"The race is on," he said, because competition is on the rise.

Jim McDowell, VP-marketing at BMW, said the X5 will attract domestic luxury car owners and BMW loyalists.

The X5 will compete with the Mercedes-Benz M-Class and the Lexus RX 300, said Mr. McDowell. He said he doesn't believe it will cannibalize sales of sibling models by Land Rover, also part of the BMW Group.

The marketer expects to sell as many as 50,000 X5s in 2001.


In 1999, carmakers sold 570,000 luxury SUVs, 10,000 more than in the prior year, according to a new report from consultancy Jacobs & Associates-17.8% of all SUVs sold. The report predicts the segment will grow to 600,000 units this year and 630,000 in 2001.

More newcomers will arrive. This fall, Acura starts selling a version close to the MD-X SUV and Porsche will introduce its first SUV next year.

Fred Schwab, president of Porsche Cars North America, said his owners have three vehicles in their garages-a Porsche, a luxury sedan and an SUV. "They trade in the sedan and SUV every 18 months, so why not have two Porsches in the garage?"

Mercedes-Benz USA spent $22 million in measured media to advertise the M-Class during the first nine months of 1999, according to Competitive Media Reporting. During the same period, Toyota Motor Sales USA spent $23 million on the Lexus RX 300; Lincoln Mercury Co., $34 million on Navigator; General Motors Corp., $47 million on Cadillac's Escalade; and Daimler-Chrysler's Jeep, $82.9 million on the Grand Cherokee.

Lexus sold 73,498 RX 300s last year, 40% of all the cars and trucks it sells, according to the Jacobs' report. The Grand Cherokee was the segment's best-seller, with 300,031 units.

Fallon McElligott, Minneapolis, created the estimated $25 million campaign for BMW's X5, including the two :30s for the Super Bowl. The commercials will run through March in prime-time broadcast and cable TV; the integrated push includes print, radio and outdoor. The car marketer's site ( offers an interactive e-mail feature starting Feb. 1.


The spots are simple, with no voice-over. One shows a female skier making new tracks on a deserted mountain on a sunny day. The only sound is the skis carving through the snow. Title cards appear with the phrases "It's not a feeling you can get every day" and "Or is it?" The two phrases also appear in all print ads.

"We feel that these quiet yet powerful stories will stand out amidst all the hype and noise of the Super Bowl," said Bruce Bildsten, group creative director at Fallon.

To spread the word, the X5 is featured in BMW's ride-and-drive tour, "The Ultimate Road Test." Prospects are invited to test BMW's SUV and competing models.

Not to be outdone, Mercedes confirmed it's planning a 10-city tour for prospects to test drive the M-Class. Ken Enders, VP-marketing at Mercedes-Benz USA, said he's confident M-Class will hold its own against new competition.

"The segment is growing at a rate that allows new players to come in and grow [it]," he said.

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