BMW's White Knight

April 4, 2006, by Bill Cawthon

How time flies when you're having fun. I let March completely get away without observing the fifth anniversary of this column. I have enjoyed writing these essays and hearing from readers with their comments, additions and corrections.

In my last column, I mentioned Irv Gordon's Volvo P1800 which holds the world's record for certified mileage by the original owner. I was delighted when Mr. Gordon contacted me after the column appeared. He reported he is well on his way to hitting his goal of 2.5 million miles by the end of this year and updated me on the whereabouts of another Volvo P1800 I had mentioned. The "Saint" Volvo that appeared in the television show and was formerly registered to Sir Roger Moore is no longer at the Cars of the Stars museum in England. It been completely restored and is now owned by Bill Krzastek, a math teacher from Waynesboro, Virginia.

While the 1950s were a time of growth for Volvo, they were a time of trouble for BMW. The company was saddled with a weak lineup of technically competent but stylistically out-of-date sedans like the 502. The beautiful 507 sports car was a critical success but a financial disaster; the company lost money on every on despite a price tag that topped $10,000 by the end of its 252-unit production run. In reality the tiny Isetta and the new 700 were the only cars the company could sell in any quantity and they weren't enough. In 1959, BMW lost millions of dollars and was in danger of bankruptcy. There was a new generation of cars the company hoped would give it a new lease on life, but there was no money with which it could develop them.

Though well-engineered, the dated styling of the Baroque Angels kept them from being successful. Pictured above is the Herpa model of the V8-powered 502. Photo courtesy of Herpa/Promotex.

Daimler-Benz, which was far larger, wanted to acquire BMW. Daimler-Benz wasn't worried about competition; it wanted to convert BMW to a supplier of bodies for Mercedes automobiles. By the end of the year Hans Feith, the head of BMW's management board, gave the board a choice: they could either let the company be bought out by Daimler-Benz or go bankrupt. Feith was also the representative of Deutsche Bank, one of BMW's principal creditors, and Deutsche Bank was also in favor of the acquisition.

At a shareholders' meeting in December 1959, Daimler-Benz won the vote but dissident shareholders managed to get the meeting adjourned before the board could make the final decision.

Enter Dr. Herbert Quandt, the man responsible for saving BMW.

Herbert Werner Quandt was born on June 22, 1910, in Pritzwalk, a town in what is now the modern federal state of Brandenburg. He was the second of two boys born to Günther and Toni Quandt.

Quandt's ancestors were Dutch rope-makers who had settled in northeastern Germany in the 18th century. His grandfather, Emil Quandt, married into a family that had made its fortune in the textiles business and eventually took charge of the company. By the outbreak of the First World War, Günther Quandt had succeeded his father and added significantly to the family fortune as a prime supplier to the German army. After the war, Günther expanded the business by acquiring several other companies including battery manufacturer Accumulatorenfabrik AG (AFA), which later became Varta AG, and metal fabricator IWKA (Industrie-Werke Karlsruhe AG).

Fate dealt two blows to Herbert Quandt in his youth. His mother died in the 1918 influenza pandemic. The following year, scarring from a disease of the retina left him nearly blind. Fortunately, his family's wealth allowed him to receive an education at home, followed by intensive on-the-job training at the family factories in several countries.

Dr. Herbert Quandt (1910-1982). He and his stepbrother Harald saved BMW from disappearing as a car company. Illustration based on a photograph in the BMW archives.

In January 1921 Günther Quandt remarried. His new bride was Magda Ritschel, a young woman from a well-connected family. The marriage produced a son, Harald, in November 1921. Günther and Magda were not well-matched and the union soon ran into rough waters. The couple divorced in 1929. Magda later married Nazi propaganda minister Josef Göbbels and died with him after murdering their six children in the Führerbunker in May 1945. Harald, who stayed with his father following the divorce, was the only one of Magda's children to survive.

In 1927 Herbert Quandt's older brother, Helmut, died of complications of appendicitis.

In 1940, at the comparatively young age of 30, Herbert Quandt became a member of the supervisory board at AFA. In the same year, he divorced his first wife, the former Ursel Münstermann.

While it is known that some of the factories controlled by the Quandt family used forced labor, it has never been shown that Herbert was involved. Günther Quandt was arrested and interned on suspicion of war crimes in 1946 but was released in 1948 after it was determined he took no part in the crimes.

Following the end of the war, Herbert Quandt played an increasing role in running the family's business. He rebuilt the factories and instituted management changes giving executives more autonomy and employees a stake in the company's success.

In 1950, Herbert Quandt married Lieselotte Blobelt. During their nine-year marriage the couple had three children. Herbert also had a daughter from his previous marriage.

Günther Quandt died on December 30, 1954, while on a trip to Cairo, Egypt, leaving the running of his empire to Herbert and Harald. By then, the Quandt group consisted of more than 200 companies, ranging from the original textile businesses to pharmaceutical company Altana AG. The family holdings also included large stakes in the German auto industry with nearly ten percent of Daimler-Benz and thirty percent of BMW. Although Herbert and Harald jointly managed the companies, Herbert focused on AFA/Varta and the automotive investments, while Harald was in charge of IWKA and the engineering and tooling companies.

Herbert Quandt took after his father. One of the wealthiest men in Germany, he shunned the spotlight. By contrast, Harald was more like his mother, Magda, who was a socialite and very outgoing. A fighter pilot in the Luftwaffe, he was captured by the Allies in 1944 and released after the end of the war. Harald was passionate about flying, loved sailing, playing the drums and accordion and had an 850 square-foot model railroad layout in his home. His love of flying caught up with him in 1967 when his Beechcraft King Air crashed in Italy.

On December 9, 1959, Herbert Quandt attended the BMW shareholder meeting. He was initially in favor of the takeover by Daimler-Benz, but was swayed to the opposite position because the workers and trade unions were against the acquisition. In addition, he was concerned by the fact Daimler-Benz refused to guarantee the continued production of BMW automobiles. In the days following the adjournment, against the advice of his bankers, Quandt began investing his fortune; quietly buying up shares and increasing his stake in BMW to nearly 50% and securing an agreement with the Bavarian state that would allow him to purchase BMW.

With its independence secured, BMW was able to move forward with its "Neue Klasse" designs, the cars that formed the basis of the modern BMW automobile. The first of these, the 1500, appeared in at the Frankfurt IAA in 1961.

Called the first modern BMW, the 1500 was a 4-door sedan with a 4-cylinder engine designed by Alex Von Falkenhausen. Von Falkenhausen revised an earlier design to create an 80 bhp, 1.5-liter hemi-head four which was then mated to a 4-speed transmission featuring Porsche synchromesh on all forward gears. A totally new unibody styled by Willem Hofmeister boasted a low waistline, slender pillars and the trademark "Hofmeister Kink" in the C-pillar. Despite its moderate price, the 1500 had an independent suspension with MacPherson struts at the front and semi-trailing arms at the rear. The one requirement that Herbert Quandt required was the retention of the traditional BMW "kidney" grilles (the original design called for the grille to go straight across).

When the new 1500 went on sale in 1962, the company had a hit on its hands. Production was unable to keep up with demand and BMW was able to pay its first dividend in over a decade. In September 1963 another new model, the 1800 appeared. Equipped with a 90 bhp, 1.8-liter engine, the 1800 could do over 100 miles per hour in stock form.

Herpa's new model of the 1971 BMW 2000tii Touring is scheduled for a June release. Photo courtesy of Herpa/Promotex.

In the meantime, Herbert Quandt had left the limelight. He was still the power behind BMW and the chairman of the supervisory board, but true to his belief in decentralized authority, he left the running of BMW to others until 1969. That was when he appointed 40-year-old Eberhard von Künheim and managing director. Quandt's choice was brilliant: von Künheim transformed BMW into the premium brand it is today. He ran the company from January 1, 1970, until his retirement in 1993 and served as chairman of the supervisory board until 1999. He was inducted into the European Automotive Hall of Fame in 2004.

Herbert Quandt married for the third time in 1960. Johanna Bruhn had been his secretary in the 1950s and became his personal assistant. The third time proved to be the charm; Herbert Quandt remained married to Johanna for the rest of his life and Johanna never remarried after his death. They had two children, Stefan and Susanne, who today serve on BMW's supervisory board and are among the wealthiest people in Germany. Johanna also served on the board until she retired in May 1997. Like Herbert, the rest of the Quandt family members are very private people. Susanne was working under an assumed name at BMW when she met an engineer named Jan Klatten, whom she later married. She never let him know who she was until a relationship had developed.

Quandt also took care of his other children. Though none but Stefan and Susanne have an interest in BMW; his children from his previous marriages received large shares in other Quandt family companies. He gave Silvia Quandt, his oldest child who is an artist living in Munich, a nice nest egg of stock and property. His three children from his second marriage received the majority of the family's shares of Varta Battery AG. Of course, there was plenty to go round; the Quandt family fortune is measured in the billions of dollars.

BMW's white knight died on June 2, 1982 in Kiel, Germany, less than three weeks before his 72nd birthday. But his legacy is a company that has become one of the world's premiere vehicle manufacturers and whose products routinely appear on automotive "best of…" lists around the world. The New Class that Herbert and Harald Quandt made possible became the most successful BMW model series to that time, with over 300,000 cars produced.

Herpa has announced a model of a New Class car, the BMW 2000tii Touring, as one of its May-June releases. The 2000tii Touring was one of the three-door hatchback variants of the later Neue Klasse sedans produced from 1971-1974. There were actually four variants of the Touring, with designations based on engine size. The 2000tii was the most powerful, offering a 2-liter engine with the fuel injection system BMW introduced for the 1969 model year. Production lasted only until 1972 when the model designation was changed to 2002tii Touring to conform to the changeover in the rest of the line.

Herpa's 1:87 Scale BMW 1600-2 is currently available from Promotex. The 1600-2 was one of the first New Class BMWs to be imported to the United States. Photo courtesy of Herpa/Promotex

The Touring shared some of the sedan's body panels, like doors, front fenders and hood, but the rest of the body was unique. All of the glass was different, as well, with a windshield that was larger and more sharply angled. The Touring roofline is about an inch lower than the sedan and the car is about eight inches shorter, thanks to sharply reduced rear overhang.

The Tourings weren't as successful as BMW had hoped. Even though they handled as well as the standard sedans and offered added practicality, the sedans were much more popular with car buyers. BMW phased out the Touring series in 1974.Though the Touring was never officially imported to the United States, a number of European 2000tii Tourings have been brought over by collectors.

The new 2000tii isn't the only New Class model available from Promotex. There's also a very nice 1966 1600-2 sedan that is available now. One of the first New Class models imported to the U.S., the 1600-2 received rave reviews from the motoring press. In their February 1967 issue, Car & Driver called it "the best small sedan we ever drove" as well as the "the best economy car ever offered to an undeserving American public."

See you next time!

- Bill Cawthon

Bill Cawthon is a modeler and collector. His primary hobby interests are vehicle models in 1:87 and 1:160 scales and model railroading. He is one of the creators of the award-winning "Grimy Gulch" model railroad layout.

In real life, Bill is a marketing and public relations consultant working with the information technology and hobby industries. He is an associate editor for Model Railroad News and writes a monthly column on the U.S. light vehicle industry. He is a member of the 1/87 Vehicle Club and the Texas Auto Writers Association.

He lives in Houston, Texas with his wife, Marge, and their children.

Bill's columns appear twice monthly on Promotex Online. To learn more about him, click here.