2005 BMW 325

2005 BMW 325 Test Drives

The New BMW 3 Series

Forbes.com takes the first spin in BMW's overhauled 3 Series, the company's highest-selling model.

by Dan Lienert, Forbes.com

BMW's 3 Series is an automotive icon, just like such revered and historic nameplates as the Chevrolet Corvette and Porsche 911. But while the Corvette and 911 are comparatively low-volume, the 3 Series is BMW's best-selling car, year after year.

In 2005, the company is celebrating the 30th anniversary of the 3 Series, a line whose outgoing generation includes convertibles, coupes, sedans and wagons. In June, BMW will release the fifth generation of its 3 Series sedan in the U.S. Forbes.com recently traveled to the new 3 Series' media preview in Valencia, Spain to take the first spin in the car. Please see the slide show that follows for more information and driving impressions.

BMW's mid-term financial well-being depends on a successful introduction of the new 3 Series. In terms of new cars coming down the pipeline, the company appears to be headed for a slowdown. Some high-performance "M" cars are on the way, and possibly a minivan as well, but over in Stuttgart, DaimlerChrysler's Mercedes-Benz brand is ready to crank out several new models, including the new CLS-Class sedan and redesigns of the M-Class sport utility vehicle and S-Class sedan.

German automakers are suffering from the strong euro, especially compared with profitable automakers from Japan, where the yen is more closely pegged to the U.S. dollar -- and, if you agree with General Motors, unfairly undervalued by the Japanese government. But even if BMW has smart currency-hedging policies, it is not publicly traded here and lacks the resources that Mercedes has to ride out tough times.

Stronger net profits are not the only advantage the Japanese have over the Germans. Premium sedans such as Honda Motor's Acura TL and Nissan Motor's Infiniti G35 are strong performers, both behind the wheel and in showrooms, where they are trading in high volumes. Last year, Infiniti sold 71,000 G35s in the U.S. and Acura sold 78,000 TLs, compared with 107,000 3 Series sales for BMW.

German cars are also beginning to look less reliable than Japanese ones, and Consumer Reports says the Infiniti G35 is more reliable than the 3 Series.

Asked for comment on this, BMW board member Burkhard Goschel said in an interview at the media preview that the new 3 Series would be more reliable than the old model, because of more sophisticated technology in areas such as the engines' self-checking systems.

Goschel said the diesel version of the 3 Series could end up in the U.S. one day. BMW is monitoring changing emissions regulations before making a decision on whether to sell diesels here. The company is on track, said Goschel, to sell a hydrogen-powered version of its 7 Series flagship sedan by approximately 2007, but that it might not sell its 1 Series line of compact sedans and/or hatchbacks here during that new car's current generation.

The new 3 Series sedan will go on sale in June. The next body style to arrive could be the wagon, which will go on sale in Europe by year's end. The high-performance M3 derivative will arrive within three years.