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2016 BMW X1 First Drive [w/video]

Perhaps more than any other model, the X1 exemplifies the shift going on at BMW. That the X1 is the first front-drive-based car to wear the BMW badge in the US is both remarkable and doesn't matter at all. Some background: The first X1, sold here for the latter half of its six-year run, was an Old BMW. Based on E90 3 Series underpinnings, it was basically a tall, last-gen 3 wagon, a car on short stilts. We loved it. It drove almost exactly like a good 3 Series at a time when that 3 Series was no longer available. It sold in okay numbers. It's gone now. This new X1, the 2016 model, is a sort of about face, or at least a right-hand turn in the engine compartment. This is New BMW. The base engine is again a 2.0-liter four-cylinder, a new design based on the company's modular engine architecture that can spit out threes, fours, and sixes using the same component set. It's mounted transversely, not longitudinally like in the rest of BMW's US offerings. It loses some horsepower to the last X1's 2.0 (228 hp versus 240) and a bit of torque (258 lb-ft down from 260). Again, few will notice. The optional 3.0-liter turbocharged six from the last generation is gone. Not many customers chose it, and the six likely wouldn't fit under the hood of this rearranged X1. EPA fuel-economy numbers match those from the 2015 xDrive28i exactly – 22 mpg city, 32 highway – so no gains there. So packaging won. There's really no other explanation for the longitudinal-transverse swap, except that maybe it's less expensive to build this way. EPA fuel-economy numbers match those from the 2015 xDrive28i exactly – 22 mpg city, 32 highway – so no gains there. But the packaging advantages are abundant. The interior is somewhat narrow, but it's opened up a bit by the lack of a transmission tunnel that would normally eat space between the front occupants. Instead, the center console is set low, with a tall shift lever rising practically from the floor up to meet your hand. There's storage forward of the shifter and a folding center armrest that opens for small items. The original X1 was sold here with rear-wheel as well as all-wheel drive. For obvious reasons, that won't be the case this time around. BMW also won't sell a front-drive model here (although one is offered in Europe and elsewhere) likely because it would involve the admission that this is not your average BMW, but instead a New BMW, one designed for more people and fewer enthusiasts.

The UK votes for Brexit and it will impact automakers

It's the first morning after the United Kingdom voted for what's become known as Brexit – that is, to leave the European Union and its tariff-free internal market. Now begins a two-year process in which the UK will have to negotiate with the rest of the EU trading bloc, which is its largest export market, about many things. One of them may be tariffs, and that could severely impact any automaker that builds cars in the UK. This doesn't just mean companies that you think of as British, like Mini and Jaguar. Both of those automakers are owned by foreign companies, incidentally. Mini and Rolls-Royce are owned by BMW, Jaguar and Land Rover by Tata Motors of India, and Bentley by the VW Group. Many other automakers produce cars in the UK for sale within that country and also export to the EU. Tariffs could damage the profits of each of these companies, and perhaps cause them to shift manufacturing out of the UK, significantly damaging the country's resurgent manufacturing industry. Autonews Europe dug up some interesting numbers on that last point. Nissan, the country's second-largest auto producer, builds 475k or so cars in the UK but the vast majority are sent abroad. Toyota built 190k cars last year in Britain, of which 75 percent went to the EU and just 10 percent were sold in the country. Investors are skittish at the news. The value of the pound sterling has plummeted by 8 percent as of this writing, at one point yesterday reaching levels not seen since 1985. Shares at Tata Motors, which counts Jaguar and Land Rover as bright jewels in its portfolio, were off by nearly 12 percent according to Autonews Europe. So what happens next? No one's terribly sure, although the feeling seems to be that the jilted EU will impost tariffs of up to 10 percent on UK exports. It's likely that the UK will reciprocate, and thus it'll be more expensive to buy a European-made car in the UK. Both situations will likely negatively affect the country, as both production of new cars and sales to UK consumers will both fall. Evercore Automotive Research figures the combined damage will be roughly $9b in lost profits to automakers, and an as-of-yet unquantified impact on auto production jobs. Perhaps the EU's leaders in Brussels will be in a better mood in two years, and the process won't devolve into a trade war. In the immediate wake of the Brexit vote, though, the mood is grim, the EU leadership is angry, and investors are spooked.

BMW looking to save billions with cost cuts

BMW is planning a fairly extensive overhaul in a bid to recoup some its annual costs, with CEO Norbert Reithofer (pictured above) aiming to save three to four billion euro ($4 to $5.4 billion) per year to help keep the company's profit margins between eight and 10 percent, while also maintaining investments in production expansion and new tech. BMW's profit margins sat at 9.4 percent in 2013.
According to Automotive News Europe, Reithofer is none too pleased about costs at Mini and on the 1 Series, although neither AN nor its source story, from Germany's Manager Magazin, elaborate on what steps could be taken to improve losses on either project. That makes it hard to figure out just where the fat will be trimmed from.
What may happen, though, is that BMW attempts to trim 100 million euros ($135 million) from its German labor costs each year; a solution hinted at a few weeks ago by Germany newspaper Muenchner Merkur. While a dramatic cost reduction, 100 million euros still doesn't begin to even approach the savings envisioned by Reithofer.