The encyclopedia · Product & Design · Product decision · 1978–1981
BMW hired Lamborghini to build its supercar — Lamborghini went bankrupt before it was done
In 1978, BMW hired Lamborghini to build the M1 supercar. Lamborghini went bankrupt during the project. BMW finished the car itself. Only 453 were built.
BMW · Lamborghini
HearsayWidely repeated, and we cannot show you a document for it. Read it for the lesson, not as fact.
What it means today
Every company that outsources production to a partner in financial trouble — a startup that hires a struggling contract manufacturer, a brand that licenses its name to a company about to go bankrupt — faces the BMW M1 question.
What happened
In 1978, BMW decided to build its first mid-engine supercar: the M1. The car was designed by Giorgio Giugiaro (Italdesign) and engineered by Gianpaolo Dallara. BMW hired Lamborghini to build the car's chassis and body at its factory in Sant'Agata Bolognese.
The partnership was a disaster. Lamborghini was in financial trouble, and the company went bankrupt during the M1 project. BMW had to take over the production: the chassis were built by Lamborghini, the bodies by Italdesign, and the final assembly by BMW in Munich. The car was delayed by two years, and the production cost was far higher than planned.
The M1 was launched in 1978 and produced until 1981. Only 453 were built — far fewer than the 400 per year that BMW had planned. The car was fast and beautiful, but it was too expensive and too rare to be a commercial success. The German auto trade tells the story as the definitive case of a company that outsourced production to a partner that could not deliver.
Why it happened
- BMW outsourced the M1's production to Lamborghini, a company that was already in financial trouble. The partnership was a bet on Lamborghini's survival, and the bet lost
- The M1's production was split between three companies: Lamborghini (chassis), Italdesign (body), and BMW (assembly). The split added cost, complexity, and delay
- The M1 was too expensive and too rare to be a commercial success. The car's price was inflated by the production problems, and the low volume meant the car could not achieve economies of scale
The lesson
Outsourcing to a partner in financial trouble is a bet on the partner's survival. BMW bet on Lamborghini, and the bet lost. The question is whether the partner will exist when the product is done.
Aftermath
The BMW M1 is now a collector's item; clean examples sell for €500,000–€700,000. The M1's racing version (the M1 Procar) was more successful than the road car. Lamborghini was rescued by the Mimran brothers in 1980 and later acquired by Audi in 1998. The M1 story is cited in operations management as the definitive case of a production partnership that failed because the partner went bankrupt.
Sources
- BMW M1 — Wikipedia
- Car and Driver — From the Archive: The History of the BMW M1 (Dec 1981 issue)
- Car and Driver — The BMW M1 Is the Brand's First and Only Supercar
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