BMW-Mercedes cooperation may grow even tighter

Those who have followed the saga of the BMW and Mercedes cooperation talks know that the two makers have been cautious - to say the least - in working together, but at the same time the continuous nature of the talks show that both are interested in the idea. Germany’s two most prestigious car makers are already expected to announce by year’s end (http://www.motorauthority.com/news/1025798_mercedes-and-bmw-deal-expected-by-year-end an agreement to share costs by cooperating on engine construction and development, but new rumours now have the two luxury-performance giants approaching each other for an even more intimate agreement.

Although BMW’s cost-savings target of €8 billion ($11.6 billion) is expected to come mainly from lower material costs (ostensibly through larger quantity purchases to be shared between Mercedes and BMW), the new information suggests the savings will also come from joint construction of axles, steering units and possibly even drive systems, reports Bloomberg.com, citing an article in the Financial Times Deutschland. A deeper cooperation with Mercedes would make sense, since BMW is already working with PSA Peugeot-Citroen to provide motors for its Mini. More materials and technologies would be suitable for cross-platform use with a partner like Mercedes, meaning more corporate synergies - which is business-speak for lower costs.

Another possible reason the two German giants might be considering working together is a detente - of sorts - between the historic rivals. In the past, BMW has billed its cars as “The Ultimate Driving Experience” while Mercedes has always prided itself for being a purveyor of “refined luxury.” While the two goals may not seem directly at odds, taking either as priority over the other can lead to conflict. However, as each maker evolves they seem to be coming closer and closer to a nexus of performance and luxury. Breaking down the walls between the ultimate driving experience and refined luxury could lead both BMW and Mercedes into a future of ultimate refined luxury driving experience - a future neither maker would oppose.

One thing the two luxury manufacturers may want to be careful to avoid, however, is buckling to the desire to be all things to all people - as each marque expands to fill markets traditionally populated by value or commercial makers, they dilute their luxury (or performance) cachet. And melding BMW with Mercedes to the point that the two companies become a BMercW hybrid would not make each company twice what it is now, regardless of what it does for the bottom line.