Background: BMW introduces the 6-cylinder 323IS coupe and 323I convertible to replace the 318 coupe and convertible. The only remaining 318 models, and powered by the 1.9-liter engine, will be the sedan and the Ti. The sedan will not change because an entirely new 3-series sedan will be introduced in late 1998 as a 1999 model. This brings the total of 3-series models available in the United States to nine. However, there are thirty-one, 3-series models available worldwide. The 3-series, which was introduced in 1979 to replace the venerable 2000 series, currently accounts for 44% of total BMW sales.

BMW is the top luxury car among women who make up 41% of 3-series sedan buyers. A growth of 66% between 1993 and 1996. This was done with little or no specific marketing effort. We expect that this is in fact the result of women's increased economic strength in the U.S. as well as an increased appreciation for performance vehicles.

BMW had made major strides in the U.S. market since 1991. The company has grown more than Mercedes-Benz and Volvo combined, at a time when the European luxury car market has remained stagnant. The 7 and 5 series have driven this growth trend. BMW has done this by offering a quality product with a strong performance/luxury image coupled with significant reductions in the cost of ownership. Maintenance costs for the first three years of ownership have gone from an average of $1,180 to $0. This is the result of BMW's superior "no cost for 3 years or 36,000 mile scheduled maintenance" program. BMW was at one time jokingly referred to as the Break-My-Wallet car. That is no longer the case. Annual insurance premiums for BMWs have decreased 30% from an average of $3,336 to $2,338. BMWs now enjoy much higher resale value than ever before. In 1991 a three-year-old 325i retained only 37% of its purchase price. In 1997 a 3-year-old 325 retains 69% -- a much better investment.

Although 3-series sales have been stagnant, the introduction of the 323s should solve that problem. This will be the first BMW sold in the U.S. in the past five years with a 6-cylinder engine and a base price under $30,000. The coupe comes in at $28,700.

BMW has also introduced what it calls its "six-cylinder strategy". The 318s had been competing in the highly competitive entry-level luxury marketplace. Most of its major competitors had six-cylinder engines. The perception was that for the 318 to compete on the performance stage in the price range, it had to have a six-cylinder powerplant. Now, as the 323I and IS, it does.