BMW gets ready to move into compact segment with new 1-Series

FRANKFURT, Germany (AP) _ Germany's BMW has raked in profits selling high-priced larger cars. Now it's getting ready to venture into less familiar turf _ the highly competitive compact segment

Wednesday, June 23rd 2004, 11:49 am

By: News On 6

FRANKFURT, Germany (AP) _ Germany's BMW has raked in profits selling high-priced larger cars. Now it's getting ready to venture into less familiar turf _ the highly competitive compact segment _ with its new 1-series, which will sell for not much more than a similar-sized Volkswagen Golf.

The company, which was showing the car to journalists on Wednesday, says the new vehicle combines the functionality of the popular hatchback category with what it says will be the higher performance associated with the Bavarian auto maker's products.

``We see an increasing demand for a premium vehicle in this compact segment,'' said company spokesman Eckhard Wannieck.

The car won't go on sale in Europe until Sept. 18, but BMW is already marketing it heavily in Germany with television ads.

The pricing, while higher than competitors in the segment, dips fairly close the Golf and the Audi A3. The entry-level 1-Series will sell for about $23,000, the company says.

The Golf with an equivalent engine runs around $22,600, and an A3 can cost around $22,800.

The car fulfills long-delayed BMW ambitions to make smaller cars, said auto analyst Christoph Stuermer at research firm Global Insight in Frankfurt. Those plans went awry when its acquisition of Britain's Rover in the late 1990s turned out to be a flop and it disposed of its would-be mass-market arm.

``BMW is enlarging the product portfolio in the direction of greater affordability, which they had originally intended to do with the acquisition of the Rover group,'' said Stuermer.

The company also has a chance to spread its development costs by sharing much of the design and engineering with the next version of its mainstay 3-Series. Similar parts will also allow the two vehicles to be built on the same production lines, Stuermer said.

BMW is counting on the brand's ``aspirational'' or premium image and sportier performance to carve out a slice of the segment, which was pioneered by VW, but is now crowded with imitators that also include the Opel Astra, Ford Focus and Alfa Romeo 147. In particular, it's counting on rear-wheel drive, unique in the segment, which promises better traction and handling on sharp curves, the company says.

The 1-Series will hit the market in four engine versions: 115- and 150-horsepower gasoline engines and 122- and 163-horsepower diesels. The bigger diesel has a top speed of 136 mph, the company says, which could come in handy in the left lane of Germany's no-speed-limit autobahns.

The car is coming to the United States, but no date has been set, the company said.