A heady struggle to maintain independence

On Dec. 9, 1959, BMW AG came within an ace of being bought by Daimler-Benz AG.

Today the two are archrivals. But back then, Daimler was already a giant, employing 63,000 people, compared to the struggling BMW, with just 6,000 workers.

BMW's erratic new model policy through the '50s served up the miniature rear-engined 600, powered by a 2-cyl. motorbike engine and with the front of the car acting as the driver's door. The lineup also featured the baroque 501/502 saloons and the beautiful, but expensive, 507 V-8, which found just 250 buyers in its 3-year life. None was profitable.

In 1959, BMW actively courted alliances with Ford Motor Co., General Electric Co., Roots - the British carmaker eventually bought by Chrysler Corp. - and even American Motors Corp., which wanted to build the compact Rambler in Europe. Anything to prevent falling into Daimler-Benz hands.

Before the Dec. 9 meeting to decide the company's fate, Hans Feith issued an ultimatum. Mr. Feith, who headed the BMW supervisory board, also represented the Deutsche Bank - to which BMW was heavily in debt - and as such was acting in the interest of Daimler-Benz. The ultimatum? BMW could be taken over by Daimler or go bankrupt.

Daimler-Benz publicly admitted it wanted BMW to become nothing more than a supplier of Mercedes-Benz bodies, and it gave no guarantees that even one model would continue to carry the BMW badge. Daimler won the Dec. 9 vote, but acting on a little-known section of BMW's Share Act, disgruntled shareholders obtained an adjournment.

Days after the shareholders meeting, which he attended, Herbert Quandt, a wealthy industrialist whose family business made batteries, small appliances and pharmaceutical goods and who had quietly been buying up BMW shares, reached an agreement with the Bavarian State to take over BMW. Eventually, through a complex arrangement of three holding companies, Mr. Quandt ended up with between 45% and 48% of the BMW stock.

Ironically, Mr. Quandt never drove one of BMW's cars, for he was almost completely blind. Yet he loved cars and was personally responsible for maintaining the twin-kidney grille when management wanted the 1500, BMW's new midsize '63 model that began the comeback, to have a more conventional full-width grille. Mr. Quandt believed the traditional BMW grille distinguished his cars from other makes and was indispensable. It was the first - and perhaps last - time Mr. Quandt ever made the call on a design issue, for he was happy to remain in the background as power broker and chairman of the advisory board.

Eberhard von Kuenheim, personally appointed by Mr. Quandt, became managing director of BMW in 1970 at the tender age of 41, and brilliantly ran the company until appointing Bernd Pischetsrieder as his successor in 1993. Mr. von Kuenheim remains chairman of the advisory board.

The children of Herbert Quandt's first marriage were paid off in the 1960s and today have nothing to do with BMW. After Mr. Quandt died in 1982, Johanna, his second wife, took over his position on the advisory board. Johanna Quandt retired from the board on May 15, 1997, whereupon her two children - Suzanne Klatten, 36, and Stefan Quandt, 32 -took over her seat on the board. Acting largely through the still all-powerful Mr. von Kuenheim (who retires in May), the two second-generation Quandt family members finally lost patience with Mr. Pischetsrieder's administration.

Says one Munich insider, "They hated the very public fight over the future of Rover, and the battle between Wolfgang Reitzle (head of research and development) and Pischetsrieder. Reading about them in the papers every day became a cardinal sin."