It’s origins in the aviation industry, BMW’s story begins in 1910 when one Gustav Otto got his pilot’s license and founded the Gustav Otto Flugmaschinenfabrik. Primarily a builder of military aircraft, at the onset of World War I, the company failed to get a contract to build planes for the Prussian military because of quality concerns. This sent the company into financial difficulty and it was ultimately folded into a new company; Bayerische Flugzeugwerke (BFw).
BFw did get military contracts, but the quality problems plagued BFw aircraft too, since the staff was basically the staff from Otto. However, a concerted effort at reorganization and the enforcement of stricter quality standards soon solved those issues. BFw went on to become the largest aircraft-manufacturing outfit in Bavaria. Good times ensued, until the war ended. With demand for planes sharply curtailed, the company was forced to diversify to survive. So it went into outfitting kitchens and building motorcycles.
Gustav Otto’s engine builder was Karl Rapp’s Rapp Moterenwerke. Rapp also had a deal to produce V12 aircraft engines for Austro-Daimler. To oversee the production of the V12 engines, Austro-Daimler sent Franz Josef Popp to the Rapp factory. Upon arrival, Popp began to involve himself in the management of the company. Popp convinced Rapp to bring Max Friz on as an engine designer and the result was the BMW IIIa. Designed to be more efficient at high altitudes, the engine was essentially a rework of earlier unsuccessful Rapp designs.
The success of the engine generated an order for 600 copies of it, a number Rapp was unprepared to produce quickly and efficiently. So a financial reorganization of the company was undertaken to garner the capital needed to meet the order. This brought in investors who eventually edged Rapp out of a controlling position in the company. Another result of the Friz design was the realization Rapp’s designs were in actuality holding the company back. On July 25, 1917, Rapp was ousted altogether. Four days earlier, the company had been renamed Bayerische Moteren Werke GmbH when it had been decided Rapp’s tenure was at an end.
In December of 1917, the new company logo was registered. It consisted of a black circle bearing the company name, containing the blue and white panels of the Bavarian flag. In the late 1920’s, another interpretation of the logo was the blue and white field represented a white propeller spinning against a blue sky.
Through the war, BMW concentrated on building airplane engines. It went public in 1918, and was renamed BMW AG. However the war also ended that year and demand for its products collapsed. Most of the investors fled—except one—Camilo Castiglioni, who bought the rest of them out. He believed BMW had a future building engines for other applications and set Popp to work designing engines for peacetime purposes; cars, boats, trucks, and motorcycles. BMW also did a deal with Knorr-Bremse; a manufacturer of pneumatic brakes for trains to handle its excess production. Knorr-Bremse ultimately bought Castiglioni out.
Knorr-Bremse grew the company considerably, however it was more interested in its mainline business than building engines. In 1922, Castiglioni repurchased the engine building part of the company and the BMW name with it. He didn’t get the manufacturing facilities though; he just got all the plans, patents, drawings, and machine tools along with Popp and Friz. So he moved production back to the old Ropp works. This iteration of BMW’s first success came from selling engines to the Soviet Union. It also launched its first motorcycle, the R32.
The company’s first car came in 1927. The Dixi was an Austin Seven manufactured under license. BMW later bought the Dixi Company and renamed the model the BMW 3/15. BMW’s first original model came in 1933. The BMW 303 was a two-door coupe. The next model appeared in 1936, the 326 four-door sedan. The outbreak of World War II found BMW drafted to once again produce aircraft engines—this time for the Nazi regime’s Third Reich. The company stopped building cars altogether for the duartion of WWII.
At war’s end, Germany having lost the war and its production facilities literaly blasted into obliteration by bombing raids, BMW found itself nearly out of business. The company tried a number of different car modles with limited success until it bought a license to produce the Isetta, an Italian-designed micro car. The 1955 BMW Isetta saved the company when it became top-selling single cylinder car in the world. However, profit margins on the Isetta were small. BMW needed a product of its own to get on solid footing again.
Sensing the brilliance of the company despite its financial instabilities, a number of manufacturers showed interest, primarily to get control of BMW’s engine designs. However the Quandt Group ultimately garnered two-thirds of the shares in BMW and to this day the Quandt family owns the controlling interest in the company. Along the way a few interesting cars found their way out of the BMW factory, the most notable being the legendary 1956 BMW 507 roadster.
However, BMW’s big break came with the 1960s development of their “New Class” line of cars.
In 1961, the company introduced the BMW 1500—a compact sedan with the underpinnings of a sports car. Front disc brakes, an independent rear suspension system, and the free winding BMW 1.5-liter four-cylinder engine made the car an absolute delight to drive. This established the driver-oriented DNA of BMW automobiles, which continues to this day. Two door versions of the 1500 appeared in 1966, which ultimately evolved into the renowned BMW 2002—which in turn evolved into today’s mainstay of the BMW marque, the BMW 3 Series autos.
The forerunner to BMW’s 5 Series automobiles was launched in 1968, when inline six-cylinder engines found their way into the New Class platform. Four years later, this line of cars became the 5 Series BMW vehicles. The success of these cars fostered an expansion farther upmarket and the 6 Series vehicles and 7 Series autos appeared. With the SUV boom of the late 20th century, BMW introduced the X5—its take on the SUV concept. The spiritual successor to the 507 emerged in 1995, with the introduction of the BMW Z3 sports cars. (The first BMW automobiles built in the United States.)
Today, the company manufactures a full line of automobiles from the compact to the luxury class, along with a brace of Sport Utility Vehicles. Additionally, the BMW group owns the MINI and Rolls Royce brands, in addition to a thriving line of motorcycles.