Interview w. Tom Purves, BMW N.A. CEO

9/25/01

Editors:

Following is a transcript of an interview with Tom Purves, Chairman and CEO
of BMW U.S. Holding, covering timely subjects such as BMW's involvement with
Formula One, the company's support of the BMW M3 GTR in the American Le Mans
Series, as well as other subjects pertaining to the automotive business in
the U.S.

Also attached is a digital photo of Mr. Purves taken during the interview.

If you have any questions, please contact:

Roy Oliemuller
BMW of North America, LLC
201-307-4082
fax 201-307-3607

JVS Enterprises
Public Relations
203-438-0501
fax 203-431-4139
jstropus@earthlink.net

Bill Cobb
215-295-4934
fax 215-295-2202
wrcobb@attglobal.net


TOM PURVES -- biography

Tom Purves was appointed Chairman and CEO of BMW U.S. Holding Corp.,
effective May 1, 1999.  His responsibilities encompass all sales, marketing
and distribution activities for the BMW Group in North, Central and South
America.

Most recently, Mr. Purves was a Rover board member, a role he assumed in
June of 1996.  In this capacity, Mr. Purves oversaw the global sales and
marketing for the Land Rover, Mini, MG and Rover brands.  Mr. Purves joined
the BMW Group in 1985 as Sales Director of BMW (GB) Ltd. in Great Britain,
where he assumed responsibility for all aspects of sales, distribution,
parts, service, dealer and manpower development.  During his tenure as
president of BMW (GB) Ltd., the company soared to the second largest BMW
export market after the USA, and in June of 1990, he was appointed Managing
Director of BMW Great Britain Ltd.

Mr. Purves began his automotive career with Rolls Royce Ltd. Car Division,
as an apprentice engineer.  His role with the company evolved to include
several management positions in various fields including sales in Europe,
Africa, and the Middle East.

Mr. Purves was educated at Daniel Stewart¹s College in Edinburgh, Scotland.
6/16/99


Transcription of Interview with
Tom Purves, Chairman and CEO of BMW U.S. Holding

MOTORSPORTS BACKGROUND

Q  You have quite a varied background in motor sports, including rallying,
and been around it quite a while.  How did you first get involved in that
aspect of the business?

A I was very lucky.  My father was in the car business and I was taken to
motor racing (events) when I was tiny, I mean really small.  I think at the
age of 3 or 4 we went to race tracks and I saw people like Jim Clark and
Jackie Stewart when they were amateurs and it's always been part of life.
Later on I was very fortunate to be able to race carts and then after that I
had my own Clubman¹s sports car.  I very rapidly understood I was never
going to be a professional racing driver.

Q So, you are not just a CEO who¹s kind of looking at what¹s going on.  This
has been a big part of your life.

A Yes. But I think anybody who¹s engaged in the car business -- with an
aspirational brand that has sporting involvement -- has probably got
considerable interest in motor sport.  It may be a function of whether they
participated in their youth, but I think the brand of BMW is such an
all-encompassing thing, and motor sport is so much a part of it that if
you¹re not engaged in it, if you¹re not interested, then you¹re really not
doing your job in leading the brand in the right direction.

Q Unless you¹ve participated at some level you don¹t quite have the
understanding of what it takes and what all goes into racing?

A Yes, I think that¹s true.  We talk about motor sport.  I would prefer to
use the description "motoring competition" because it¹s really a form of
sport that involves so much technology and so much team development that
it¹s more than just one man against another.  And I guess that¹s the thing
that makes Formula One so complex.

Q You attended the Sebring 12-hour race last year, the Monterey Historics
and the Indy Formula One race -- three good ones.  Did you attend events
this year?

A I should also tell you I attended the Daytona 500 (last year), because I
thought I ought to at least see one NASCAR race while I was in the United
States.  I must say that it was a lot of fun.   It was great racing.  And
this year I also got to Daytona.  I intend to be at Indianapolis.  I missed
out on Montreal for the Canadian Grand Prix.

Q At these races ­ like the Monterey Historics ­ what do you find the most
attractive, the most fun?

A I think, just actually, looking at the old cars.  It¹s always fun to meet
people and at Monterey you meet people from all over the world who are
interested in old cars and if you¹ve been in the industry all your life,
then you know people from all over the place.  It¹s great to see them in an
environment like Monterey which is a very social environment.  But for me
the most interesting thing is looking at the cars and remembering seeing
some of them actually racing.  You know, you go down that line of Formula
One cars from the Œ70s and the Œ80s and many of them are beautifully
prepared today, probably better prepared than they ever were at the time
they were raced.  It¹s like one¹s yesterdays.  (You say) I remember being at
Silverstone that year, or you remember a girlfriend in relation to a
particular car -- something like that.

AMERICAN LE MANS SERIES

Q In a lot of companies racing is just something that they do as a small
part of their marketing effort to show they¹re sporty.  That isn¹t really
the case with BMW.  It¹s been a part of the company¹s philosophy ever since
I can remember.  Tell me about that.

A I think there are two great issues here.  There¹s what I referred to a
little earlier when I said it¹s motoring competition.  BMW is a very
competitive organization.  We are as a brand in direct competition with
other aspirational brands.  So we like competition and enjoy competition.
There¹s a natural transfer from enjoying competition to the competition that
your company is directly engaged in on the race track.  This is one of the
great symbolisms of our business.  The second element of it is BMW builds
the ultimate driving machine, and, really, only by racing and testing on
tracks and having a crossover from the engineering knowledge you get from
that into your production cars are you going to build truthfully the
ultimate driving machine -- a car of competence and integrity that is
thrilling to drive and exciting and has the right sort of responsiveness
through the steering and the pedals.  And that¹s what BMW¹s all about.
We¹re competitive and we build great cars and we can only build great
driver¹s cars if we¹re involved in motor sport.

Q Let¹s talk a little bit about the M3 effort.  You have a really serious
effort with the new V8 and the M3GTR.  You made a very large commitment.
Actually, there are two teams running.  What are your goals with this
program?

A Well, we want to win!  That¹s a clear goal.  That¹s the goal for all motor
sport.  But it¹s also to stay very much in touch with a terribly important
customer group.  Our BMW Car Club of America owners represent something like
10 percent of the total owners of M cars in this country.  M cars benefit
from direct involvement in motor sport and this linkage between GT racing
and production car racing is clearer for all to see than the linkage between
Formula One and production car racing.  And, of course, Formula One only
comes to the States once a year to Indianapolis and, as yet -- although
Speedvision are doing a terrific job covering (the overseas races), it¹s not
very openly available to everybody in the States (Note:  ABC will be
covering the 2001 race).  So, being involved in GT racing for us is a very
logical thing to do.  We are committed to it in a substantial way with two
teams, primarily because we also run cars in Europe in the European Le Mans
Series and the Schnitzer German-based team are involved in that and the PTG
team¹s responsibility is the American series.  But when we¹re in an early
stage of development of a new car and a new engine, as we are at the moment,
then having both teams competing together just speeds up the development
process.

Q What¹s the relationship between these two teams?  Are they competitors?

A All racing teams are competitors and if anybody tells you they¹re not,
then they¹re avoiding a direct answer.  But our ideal result is a 1-2-3-4
for BMW, and whichever team wins is not really the issue as long as it¹s a
BMW that wins.  Having said that, there are advantages in having two teams
running together, especially if they¹re running on different tires, for
example.  That can be very helpful to you.  And, in the particular situation
that we find ourselves in, also having a German-based team at an early stage
of the development of the car, which has been developed by BMW Motorsport in
Germany, has been hugely helpful.

Q The M3 is certainly as close as you¹re going to get to driving a race car
in a two-door sedan.  That¹s one of the things that all the drivers who
drive for the PTG team in this country all say.  There really isn¹t that
much difference other than wider tires and more power between a road M3 and
a racing one.

A That¹s true, and there¹s a lot of technology in a road-going M3 that comes
straight from the race tracks.  The teams that we have today here in the
States, PTG and Schnitzer, have been racing M cars, GT cars, for years and
years and years, touring cars before that; and all that feedback goes into
the development of new cars.  So, yes there is a big linkage between the
two.  But, you know, there¹s also an emotional connection.  People in this
country enjoy being involved in what they do.  We know from our market
research (that) BMW customers are very active people.  They don¹t
necessarily all go to race tracks.  I mean, they actually go fishing.  They
may play golf or tennis, but they¹re active people.  They want to do things.
So the M car owners for their part are really active people.  And I know if
you go to Pebble Beach, for example, and you see the BMW Car Club Corral
there it¹s bigger than the Porsche Club Corral.  The fact that more BMW
owners are interested in going to Pebble Beach -- and should I say Monterey
really as they¹re going to go to Laguna Seca for the races -- than Porsche
owners are identifies what sort of linkage there is between the track and
the road cars that they drive.

Q Porsche has always been basically a sports car company.  BMW, even though
it does make some beautiful sports cars, has been a company that gives you
cars with that same sort of performance but have a back seat as well.  Let¹s
just talk a little bit about the differences in the companies.

A Well, that¹s true, although it¹s fair to say that the original BMW sports
car, the 328, was the greatest sports car of its era before the second World
War and many great racing drivers started their careers in them and talk
about them positively today.  I guess the modern incarnation of BMW was the
1602, the 2002, which were really sports sedans and that¹s what we know
today.  The 3 Series remains the greatest sports sedan in the world and our
5 Series and 7 Series cars are very sporting cars to drive.  We would simply
say that we go for perfect balance in our cars.  We go for as much as an
even weight distribution as we can find -- 50-50 weight distribution, engine
in the front, drive in the back.  That way the wheels in the front are free
to steer.  The wheels in the back are free to drive.  That for us gives you
the best balance and the best responsiveness.  Porsche, for their part, have
this interesting concept of the engine in the back which has its own
challenges with it.  And they¹ve developed it brilliantly into a very
responsive car.  But I think the important thing is that they are icons in
their own way.  They are branded in the metal.  A Porsche is a Porsche is a
Porsche with its unusual structure design.  A BMW similarly.

And you can see this also reflected, for example, in our motorcycle business
where we stay with the Boxer engine, the flat twin Boxer engine which gives
a very special character and nature to our motorcycles, lots of torque --
typically a BMW motorcycle.  In the same way that other people like Harley
have their unique, iconic engine structures, Ducatti with the Desmodromic
valve gear and so on.   So really when you talk about the great brands, they
are branded in the metal and that¹s where BMW and Porsche share something.
They are branded in the design, in the actual concept of delivery of
exciting driving to their consumers.

Q There has been some controversy about putting a V8 in the M3 since there
isn¹t currently a production one, although most of the complaints seem to be
coming from the teams that BMW is racing against.  Are you comfortable with
that?  It¹s within the rules, but if somebody came in and said I want a V8
M3, could you deliver one right now?

A I¹m delighted that we have the V8.  It does completely comply with the
rules, which is what I understand we have to do.  And that¹s really all
that¹s important.  And I think Porsche in their way could remember the Dauer
Porsche at Le Mans and ask the same question and that car completely
complied with the rules.

Q So it¹s the letter of the rules?

A Well, you have to make a differentiation between winning and spirit.  And
this issue of what is the spirit of the rules and what are the rules, I mean
you have to be pure about it.  The rules are the rules; and our car complies
with the rules.  Simple as that.  We want to win.

Q Are you building X number of these cars to comply with the rules?

A I can¹t tell you the actual wording of the rules and I wouldn¹t normally
be able to do that anyway.  What I do know is that this car complies
completely with the rules.  We build V8 engines, of course ­ M V8 engines --
and we have a V8 M3 and this car is built to comply with the rules and
regulations.  So, I actually find the whole issue really slightly amusing
because at the end of the day when you get in a boxing ring, you abide by
the rules.  We¹re abiding by the rules.  Derek Bell was asked the question
on the Speedvision program, the great Porsche driver.  They were
commentating at Sebring this year and he said the Porsche people don¹t much
like this and he said they should remember the car I drove at Le Mans ten
years ago.  Everybody is competitive in this business and all we do is build
cars to comply with the rules.  We want to win.  Simple as that.

Q You mentioned having going to the Daytona 500.  Certainly in terms of
making it a show, NASCAR and Winston Cup have really figured that out.  Are
there some things that NASCAR does that sports car racing might look at to
improve its popularity?

A Yes.  I think what NASCAR has done is to create a tremendous spectacle ­
great excitement, a family event.  Everybody loves going there.  The
facilities work.  The noise is exciting.  You can¹t help but be impressed by
three cars abreast at 180 miles an hour.  The reason I went to Daytona, I
was told by a Formula One team owner, ŒTom, if you¹re going to the States
you¹ve got to go to Talladega and watch the NASCAR races.  It¹s one of the
greatest sights and noises in the whole of motor sport.¹  Actually, I
haven¹t gotten to Talladaga yet but I did make it to Daytona.  I think
sports cars and indeed Formula One can learn a lot from the way the whole
NASCAR event is marketed.  I think Indianapolis at the U.S. Grand Prix last
year was actually a good step in the right direction both for Formula One
and for Indianapolis.  The connection of this ultimate form of motor sport
in the ultimate cathedral of motor sport here in North America is bound for
greater success in future.

FORMULA ONE

Q A lot of people look at Formula One cars and they see these little
rocketships and they say, these don¹t bear any relationship to a car in the
road.  But when we go back to the last time BMW was involved in Formula One
and won the world championship, a good deal is due in part to the advanced
engine management system.  Lo and behold, the cars that BMW sells today
probably have an engine management system far superior to what Nelson Piquet
had that day.

A Yes, and when Nelson Piquet won the world championship with the Brabham
BMW in those days he did so using a turbocharged engine which used a
stock-block 4 cylinder BMW crank case as its root ­ as its base.  And those
engines were developed on dynamometers that couldn¹t cope with the power.
He had more horsepower than the dynamometer could calculate or could track
for qualifying, something like 1,200 horsepower at times.  So, yes they were
unbelievable engines in their day and, of course, the engines we have today
are equally extraordinary in their performance, although they don¹t use a
production engine block.  But it¹s the technology transfer you get from the
cars and it¹s not just actually from the engines themselves ­ the engine
management systems, the materials, the lubrication and so on ­ it¹s things
like the brake systems, the suspension systems.  If you think of the
development of brake rotors, it¹s quite common to see brake rotors on cars
today with vents drilled and so on.  The whole concept of disc brakes first
appeared on race cars in the early Œ50s, and now they¹re standard equipment.
Everybody had drums up until then.  If you drive a really old car, drive a
BMW pre-war 328, it¹s got wonderful steering, got brilliant engine response,
a very nice gear box.  It¹s one of the old -time great cars to drive.  Put
your foot on the brakes and you realize you¹ve gone back seventy years in
time and, today, with carbon-fiber brakes and the materials they¹re using in
Formula One cars, it¹s just a matter of time before some of those
developments come on to production cars.  In fact, some of our M cars have
floating rotors which are directly related to race car brakes.

Q If you look at NASCAR Winston Cup, people on the surface think that maybe
those cars are a lot closer to the production cars they would buy than
Formula One.  But in reality they have carburetors, which we haven¹t seen in
a road car in twenty-five years, and BMW has an engine management system.
Obviously, on the Formula One car that is earmarked for down the pipeline, I
imagine, for production cars.  Is that true?

A That¹s true.  Let¹s be fair to the NASCAR people.  Those cars are built to
a very specific design formula.  Within the parameters of what they do they
get as much technology as they can into them.  I¹m really quite impressed
with some of the things they do to achieve that nth degree of performance.
Getting over 800 horsepower out of a naturally-aspirated stock-block V-8
push-rod engine is remarkable by anybody¹s standards so we shouldn¹t
pooh-pooh that, but clearly the rules are designed to some extent to keep
the cost down and it is a lot less expensive to go NASCAR racing than it is
to go Formula One racing.  And they develop their technology the best way
they can and there is actually some feed-over.  Some of the Formula One
teams and the NASCAR teams talk to each other and have exchanges of ideas
about aerodynamics and so on.  But from a real sophisticated technological
development you can¹t beat Formula One.  First of all, you can¹t beat it
because the regulations allow you to do more than they do in most of the
controlled formulas like NASCAR.  And, secondly, because the manufacturers
who are building the great aspirational brands are all directly involved.
You have BMW.  You have Ferrari.  You have Mercedes Benz.  These people have
been engaged in motor sport over very many years and have a deep
understanding for the technology that¹s required.  (They) put whole teams of
people into their competition development.  And I think it¹s interesting
that BMW does a particularly good job at getting feedback from those
exploits, if you like, on the track into the production cars.  We do it in
the management structure and the organizational structure of the company.
The M organization -- who are involved in building the motor sport engines
for the Formula One cars and for the GT cars, the V8 M3s for example --
those fellows sit down and have lunch with the guys who are actually
designing and developing the road car engines.  In fact, in three years¹
time they are probably not doing the race cars, they¹re doing the road car
engine development.  They¹re the same people.  They circulate inside the
company.  There are, to my knowledge, relatively few companies that actually
do that.  Many subcontract their work to a small organization.  We try to
keep our work in-house deliberately to get that cross-over effect.

Q I imagine it also helps in attracting the top people, top engineers.

A Yes.  I think it does.  But I think BMW is also one of those organizations
that have people who are very proud to work for BMW.  If they¹re working in
the race engine department I suppose that¹s really terrific, but actually
they¹re very proud to be developing the latest Valvetronic engine, valve
management system, for example, for the production V8s or V12s.  If you meet
those fellows, between them it¹s not a question of it¹s more glamorous to be
in racing or anything, they are two different technological challenges and
they¹re interested in comparing notes to see if there¹s ways in which they
can benefit from both experiences.  But if you look at the new Valvetronic
technology that we have in the 4-cylinder engines in Europe and that are
coming to the States in the larger engines, this is a means by which we¹ve
been able to do away with the butterfly in the throttle unit.  We literally
control the inlet gas by the valve timing and the engine management system
alone.  So we¹ve gotten rid of the friction of a butterfly and that¹s a
brilliant advance.  It¹s allowed us to improve our fuel efficiency by 10
percent in our 4-cylinder engines and it will allow us to improve our fuel
efficiency and our power on our V8 engines by considerably more.  So these
are great steps forward and, of course, there¹s a huge interrelation between
the motor sport activity and the production car activity on induction
systems.  The M cars we build (that) you can buy today on the road have
effectively an adjustable inlet manifold system which comes straight out of
race car development.  In fact, in the very latest M car they used the
Formula One engine management control system to set up the best ratios for
adjusting the induction manifolds.

Q So is this cross-over?  Do you suppose this is why BMW surprised everyone?
Everyone said it took years to be competitive in Formula One and it didn¹t
take BMW very long.

A We¹ve been very quick in becoming competitive.  We¹ve been ahead of the
game, I think -- certainly ahead of our own plans.   More power to the
people who¹ve done that.  It¹s a great organization and it¹s a great, great
success for (Dr.) Mario Theissen (BMW Motorsport Technical Director) and all
the people in Munich who¹ve done that.  We¹re very proud of the result.

Q BMW hadn¹t been in Formula One in seventeen years, but it wasn¹t like
these guys were sleeping on the couches over there.

A No.  Don¹t forget, we¹ve never been out of motor sport.  We were building
touring cars.  The European touring car formula with 2-liter, 4-cylinder
engines is a very highly-competitive formula.  You need to stay very much in
touch with combustion chamber development and materials development and all
those kind of things; and we here in the States have been very successful in
beating Porsche regularly in GT racing with our M3s.  You don¹t do that
without being very much in touch with what¹s required inside a race car
engine.  So, the Formula One engine in a sense is a great step forward from
that.  But at the end of the day, the valves, exhaust valves and combustion
chambers are the same.

BMW IN THE AUTOMOTIVE ARENA, AMONG OTHER SUBJECTS

Q Your main rival in the ALMS series is also a German car company.  But the
two companies have fairly different philosophies, not only where they put
the motors, but the type of cars they build.  How do you compare BMW with
Porsche?

A We have great admiration for what Porsche do.  They¹re a great company.
They¹ve had great racing results over the years.  They¹re a dedicated sports
car company.  They¹re not involved in Formula One.   When they have been
involved in Formula One it¹s only been for very short periods in a very
limited way.  But they won Le Mans, I think, more times than any other
sports car brand.  So they have a proud heritage.  They have a different
philosophy  -- they put their engines in different places.  It actually
makes the whole thing really much more interesting.  Great brands in a way
are truly represented by the products that they offer and the products that
they offer reflect those brands.  And the great brands do things in original
ways and I think the 911 Porsche is one of the icons of the sports car
world.  It has a rather unusual way of putting the engine at the back.
Originally when it was air-cooled it was even more extraordinary.

Q  The M3 has been a very successful car here in North America.  The M Brand
started with one model.  Now I guess there are five.  The M Brand has been
BMW¹s racing brand.  Is there a correlation between its racing success and
the success of the M Brand?

  A Oh, definitely.  Ten percent of our M car customers are members of the
Car Club and are enthusiasts who go to the race tracks and watch the results
of our racing.  I think it¹s absolutely clear that the linkage between the
cars  we race on the track and the road cars drives the degree of success,
not only in terms of actually physically seeing the cars win, but actually
driving the development of the cars for the future.  So, it¹s logical for us
to have five M cars in a way because we build this great two-seater sports
car, the Z car.  We build a great coupe.  The M5 is just such a magnificent
product.  The M5, from my perspective, represents the high point of the
whole M car philosophy, partly because it has this stunning performance and
partly because it¹s so understated from the outside.

Q I understand the BMW Car Club events get 300 to 350 BMW owners out there.
And it seems like a lot of these people would rather go out and do a little
driving themselves than just spectate.

A Yes, they do.  Indeed, I was sitting in my dentist¹s chair the other day
and he was drilling away and he said to me, ŒI¹m looking forward to this
weekend, Mr. Purves.  I¹m going out to Lime Rock to drive my M3.¹  And he¹s
a Car Club member.  I didn¹t actually know that.  He has a 540 which he
drives to his practice every day and he has an M3 which he tows to the BMW
Car Club events when they hold them at Lime Rock or before when the old
track on Long Island was still open (Bridgehampton).

Q This seems to be a real growth part of motor sport.

A Well, I think it¹s normal.  I think people see the open road as being more
congested.  They have great respect for safety and they realize that the
open road is not the place to use ultimate performance and they choose to go
to a track and enjoy themselves.  You see this also with the motorcycle
business.  More people go to track days and enjoy themselves in a controlled
environment.

Q There was a time when you wouldn¹t dare take a road car to a race track
and burn the brakes out in three laps or so.

A Well, that¹s true.  I remember, when I was involved in the British BMW
business, we used to support Jackie Stewart¹s Grand Prix Mechanics Charity
Trust.  And each year they had an event at Silverstone where you could buy
hot laps sitting in a road car being driven by a Formula One driver.  And it
was always the BMWs that the Formula One drivers wanted to drive ­ not just
because they enjoy driving them so much, but because the brakes didn¹t burn
out after three laps.

Q So the M3 is just as happy on the race track as it is on the road.

A Yes.

Q With all these M cars is there a plan to build more M cars?

A Yes, M remains a really important part of our future philosophy.  You will
always have M coupes.  You will have M sedans.  The M roadster in its own
way has been very successful and we look forward to maintaining the M
business more or less in the structure as you know it today going forward.

Q There¹s an adage in racing that speed costs money.  The question is how
fast do you want to go?  More speed has a price.  How fast does BMW of North
America want to go?

A Oh, very fast.  We¹re also cost conscious, which, as you quite rightly
point out, is a control factor in motor sport.  But the important thing is
to do things properly.  If you¹re involved in the BMW business, whether you
are running a dealership, whether you are involved in the sales organization
or whether you are involved in the manufacturing process or the R&D process,
you are taught that you do things the right way.  And that is a quality way
and that does cost money, and motor sport is expensive.  But it¹s an
inherent part of our marketing mix.  It¹s the fundamental way we do things.
That¹s why we¹re so happy to be involved in it.

Q Several of your competitors have come out with what are obviously BMW-type
cars, sport sedans that have gotten good reviews although no one has said
they¹re BMWs.  There is a certain magic whether it¹s there in engineering or
just there in terms of magic -- the advantage BMW has over your newer
competitors, let¹s say.

A I would say we¹re one of the brands that¹s as near to pure as you can get
and pure whether it¹s in a drink for example -- a malt whiskey -- or whether
it¹s pure in terms of a motorcycle or pure in terms of a car, people are
looking for a degree of purity.  And when you say BMW you know it¹s the
ultimate driving machine.  They are all built to be fun to drive.  They¹re
all built to connect with the customer.  They¹re all built to give some
inherent driving responses that good drivers enjoy and like.  And you know
there¹s not so much compromise around a BMW.  This is one of the reasons
that we have such loyal customers, and one of the reasons that people
continue to understand what BMW is all about.  Some of the brands that will
build a car to compete with our cars are excellent car manufacturers and
they build an excellent product.  But their cars are ubiquitous; they could
be anything to anyone.  If I say BMW, it represents something to you --
whether I¹m driving a 7 Series or a 3 Series.  If I¹m driving an XYZ car, it
could mean anything to anyone and I think this is the issue.  We are very
much a pure car company.  Don¹t forget that our (BMW of N.A.) total volume
of sales is, at a low rate,150,000 units.  That¹s not a lot.  And from that
point of view we can afford to steer away from compromises that make us
ordinary.

Q What would happen if you went over to Munich and said, Look, I¹ve got a
great idea to sell more cars in North America -- softer suspensions, bigger
cup holders, softer seats; everything they hate.  What would they do to you?

A Actually, that¹s a very interesting point that you raise.  First of all,
they would smile.  And, secondly, they would actually ask upon what basis
should we be changing our brand values to suit the U.S. market?  And, of
course, the truth of the matter is that we have done very little to change
our brand values to suit the US market.  What we do do is we, if you like,
tune things to suit market conditions.  So, for example, the automatic gear
box programming for Germany, Japan and the U.S. are different because there
are different traffic conditions, there are different speed limits in those
countries.  And, you can actually adjust the automatic transmission
programming to get better fuel efficiency or better smooth changes under
certain circumstances.  That¹s the sort of thing we do adapt and change to a
market.  But we don¹t adapt and change things like the leather upholstery or
the way the steering wheel is designed.  These are fundamental BMW things.
In fact, in this country we¹ve seen a great resurgence in classical values.
We see more stick-shift cars now than we did five years ago.

Q It¹s kind of funny when Formula One is going to fully automatic
transmissions next year.

A Yes, and Indy cars are not. We will be able to offer a sequential manual
gear box in the future on M cars.  It¹s going to be interesting to see what
the American enthusiast really wants to support.  I¹m responsible for Latin
America.  If I ask our Brazilian and Argentinean sales companies, Do you
want a manual gear box in the future M cars or do you want a sequential
manual gear box?  They say they want an SMG box like the Formula One cars.
If I ask our American group, they say they want a shifting box.
Interesting.  That¹s your orientation.  The Latin American orientation and
even the Canadian orientation is a European orientation.  The American is an
American orientation, accepting and enjoying the European brand values.  So
we do have to be careful with issues like that.

Q The drivers that you have for the U.S. ALMS team have some interesting
backgrounds.  One is Hans Stuck, who raced for Porsche -- actually he
started racing BMWs first --
who¹s a national hero in Germany and quite a character.  Tell me about him.

A Well he¹s a great character, as you said.  Of course, his father was an
extremely famous racing driver and Hans has done a great job over the years
driving all the cars he¹s driven.  But my abiding memory of Mr. Stuck was
driving Batmobiles for BMW.  Flying ten feet high at the Nurburgring.  So,
for me, he¹s always been a BMW driver.

Q He told me his first race was in a BMW and a fuel hose kept coming off at
the Nurburgring.  He had to stop like seven times to fix it and he still
finished third.

A But I saw him race in Le Mans in a Porsche in 1988 when he had a ding-dong
battle with the Jaguar ­ the Walkenshaw Jaguar cars.  And it was
unbelievable, his driving in the wet.  I shall always remember that.  The
way he could lap in the wet almost as quickly as some of the cars were in
the dry.  He's an outstanding driver.  We¹re very proud to have him.

Q And how about Bill Auberlen, who¹s driven both for BMW Motorsport and BMW
Team PTG?

A He¹s a great driver -- very, very quick in everything.  In fact, he was
driving last year at Monterey in a 2002, I believe it was, might even have
been a turbo 2002.  He was extremely fast in that and made a lot of the
historic drivers blanch when he went past them.  He¹s also from our
perspective an important man because being a Californian resident he¹s very
close to a hugely important part of our business.  I mean California, with,
40,000 cars a year sold there, sells the same number of cars that we sell in
the whole of France.  So, it¹s a very important market for us.   And having
one of our drivers coming from California and being connected in that world
is helpful to us too.  And, of course, we¹ve also got Boris Said, haven¹t
we?  He¹s another great California colorful driver.  So, yes, good team.

Q Boris¹ father was a racer.

A Yes, like Hans Stuck¹s father.

Q There certainly is nothing like the first lap at Daytona is there?

A No.  Very special.

Q BMW has quite a legacy -- and it¹s growing every year -- of wonderful
cars, the 320 turbo that David Hobbs raced, and the 3.0s.  What is the BMW
car collection?

A Well, it¹s a small collection.  To put it simply, it¹s important cars that
we¹ve been involved in racing -- either M3s or a V12 Le Mans car, the car
that actually won Sebring.  And we have an F1 McLaren BMW that ran at Le
Mans some years back.  And we use these cars for events and promotions and
it¹s always fun to see them.  Enthusiasts love them.  People who are not
enthusiasts are interested in them because, of course, old race cars with
all their wings and bits and pieces on them are so much more dramatic than
an old road car.  It also keeps us in touch with our history so that when
people join the company, they can actually see these things and it makes the
history live in an appropriate way.  What we don¹t really have are huge
museums.  We have collections of vehicles that we try to keep moving from
place to place because we also think the cars that we own and the
motorcycles that we own should be used.


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