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New Model BMWs to Go on Sale in Europe

July 5, 2003

FRANKFURT, Germany (AP) _ Auto maker BMW launches its new-model offensive in earnest Saturday as its redesigned 5-series cars go on sale in Europe _ a make-or-break product launch that will determine profits for years to come.

The 5-series, wedged between the smaller, mass-market 3-series and the high-end 7-series, had only about 20 percent of BMW’s sales volume last year but contributes an estimated 35-40 percent of the Munich-based carmakers profits.

Last remade in 1995, it’s the most important new design in BMW’s high-stakes attempt to shake up its product line this year and next. The X3 sport-utility vehicle and 6-series luxury coupe will follow later this year, with the small 1-series ``baby BMW″ to follow next year.

The 5-series ``is the backbone of BMW’s business,″ said Georg Stuerzer, auto stocks analyst at HVB bank in Munich.

For the new model, the company’s American design chief, Christopher Bangle, softened some of the style departures that led to sharp differences of opinion over 2001′s new 7-series and even an Internet campaign against the new model.

The 5-series softens the sharply raised trunk lid that some critics attacked in the 7-series, and the company simplified the iDrive knob that combines controls for things like the sound system and heating; some auto critics derided iDrive as too complicated when it appeared in the 7-series.

Customers haven’t seemed to mind since the new 7-series continues to sell a bit better than its predecessor, analysts say.

Stuerzer said the company’s older models were sometimes criticized as too conservative and looking too much alike. ``Now the model differences are much sharper,″ he said.

He said the 5-series’ technical advances, such as an active steering system that improves handling by adjusting steering response for different speeds, will give it an advantage against competitors such as the Mercedes E-class that should outweigh any concerns about the styling.

The new models should boost company earnings over the next three to four years, Stuerzer said.

The 520 version with a 2.5-liter engine starts at euro35,100, the equivalent of US$40,360 at current exchange rates. The 3-liter 530 starts at euro40,600. Option packages can push the price over euro55,000. The car goes on sale in Britain and the United States in the fall; U.S. prices have not been set yet and will be different from the European prices, the company says.

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