SCOTTSDALE, AZ – The U.S. became the No.1 market for BMW AG’s Mini brand in 2006, surpassing the U.K., says Jim McDowell, vice president-Mini USA, a division of BMW of North America LLC.

But the U.K. likely will regain No.1 status this year, as the home country got the jump on the launch of the second-generation Mini.

The all-new ’07 Mini Cooper and Cooper S went on sale in Europe Nov. 18, with the base Mini One and a turbodiesel model coming in March.

The Cooper and Cooper S finally bow in North America Feb. 17. The Mini One will not be sold in the U.S., as it does not make sense to sell the less-profitable base model in a market where demand outpaces supply for the higher-end Cooper and Cooper S, McDowell says. Americans buy the highest percentage of performance S models – accounting for about 60% of sales.

Nor does McDowell see a compelling need for diesel-powered Minis in the U.S., as the subcompact Cooper promises 40 mpg (5.9 L/100 km) on the highway with its gasoline engine.

Mini has had record sales in the U.S. every year since its March 2002 debut – with the exception of last year when it was capacity constrained because of two weeks’ lost production to install new robots in the body shop and add a second paint shop at the final assembly plant in Oxford, U.K.

Globally, Mini sales slipped 6.2% in 2006, to 188,000 units. The U.S. saw its sales decline 4.0% from 40,820 in 2005 – a much smaller shortfall than was anticipated, McDowell tells Ward’s at an event here.

McDowell expects record sales in the U.S. to return with the new model, even if total deliveries fall shy of the U.K.’s anticipated tally for the year.

He declines to give a specific volume projection but expects the ’07 model to enjoy significant growth.

Even with increased automation that resulted in a 40,000 boost in capacity to 240,000 Minis annually, McDowell is concerned about getting enough cars to meet anticipated demand.

“The world is becoming more Mini,” McDowell says. “Society values are changing.”

The U.S. allotment can be increased or decreased depending on the pace of initial sales compared with other markets, he says.

That was the case in 2006 when the U.S. was able to abscond additional cars originally allotted to other markets. McDowell does not disclose from where they were diverted.

“For the next five years, demand will be greater than supply,” McDowell says of the brand that will monitor its growth to ward against becoming too big and losing its reputation as a niche vehicle maker.

BMW launched the modern Mini in the U.S. five years ago with 70 dealers, each expected to sell about 300 small cars annually to meet the first year’s sale objective of 20,000 units.

“We overshot by 12,000,” McDowell says, with the brand selling 2.5 times more cars than expected in five years – without resorting to incentives.

Globally, the original plan was to sell 100,000 units a year. In 2005, annual production hit 200,000.

In the U.S., the dealer body has grown to 80 and will continue to expand by two or three a year over the next five years, McDowell says.

Eight dealerships are exclusive to the Mini brand now, with others talking about going standalone. Future outlets will add to the tally.

The second-generation Cooper and Cooper S are not obviously different from their predecessors, with an evolutionary design that belies the fact every piece of sheet metal is new, as are the engines.

A nod to the importance of the U.S. market is the advent of conventional cupholders and features such as an auxiliary jack for an iPod.

The Cooper will start at $18,700, a $700 increase from the outgoing model. The Cooper S will base at $21,850, up $400 from ’06. Prices include destination charges.

Marketing initiatives include continued use of special kits on the joys of being small, with decoders for Mini owners to read encrypted messages in conventional ads that send them to a special website with information on the new Minis.

Billboards in four major cities have the ability to interact with Mini owners via their key fob, signaling the sign to change to a personal message when the car approaches.

Meanwhile, the convertible variants could still be two years from migrating to the new Mini architecture, part of a cadence that should see the debut of one new model a year, for the next five years.

“We’re planning a whole family of Minis,” McDowell says. “In the studio, I have seen at least three different kinds of possible Minis that I would love to see come to market.”

First up: a stretched 4-seat wagon expected next year, referred to by such names as the Traveller, Clubman, Countryman and Detroit Concept.

The production version is expected to generate a lot of demand globally, McDowell says, with particular interest in the U.S.

In clinics, many customers who looked at a Mini and purchased elsewhere said they would have considered the Traveller had it been available, he says.

The next-generation convertibles are expected to be next in line after the stretched Mini.

A future derivative under study is a cross/utility vehicle, McDowell says. A rumored pickup is not as likely.

Parent BMW plans to begin selling the 1-Series in the U.S. next year. If the experience in Europe is any indication, the 1-Series attracts a different buyer than the Mini, so cannibalizing sales should not be an issue, McDowell says.