The BMW 507 Was A Gorgeous Failure
BMW hasn’t always been the illustrious brand it is today. The company struggled to find its footing coming out of the ash and rubble of World War II. In an effort to return to its former glory, BMW released the 503 and 507, two cars that they thought would propel them to automotive royalty. Their plan seemed to work. The likes of Elvis Presley and John Surtees took a chance on the Bavarian make. Alas, it was not meant to be. Instead of being uttered in the same breath as Mercedes-Benz and Aston Martin, BMW went spiraling into financial ruin. This is the story of BMW’s ill-fated moonshot
INTRODUCTION
Maximillian Hoffman was a lifelong businessman. He was born in Vienna in 1904 and took on his family’s entrepreneurial spirit in stride. His father ran a grocery store. From here, he branched out into the manufacture of sewing machines and bicycles. Max immersed himself in the latter, eventually taking part in local race clubs. The leap to automobile racing was inevitable. When this happened, the family encouraged him by gifting him an Amilcar. He found even greater success here. An Austrian firm that built the car under license took notice and made him its factory driver.
Max stepped away from the sport in 1934, but he didn’t leave the automotive industry. An importing company by the name of Smoliner and Kraky brought him on as an agent. The firm imported the likes of Dusenberg, Pontiac, and Lancia into his native Austria. Hoffman excelled in this role as well and soon established his own business called Automobilhandel Hoffman and Huppert which pretty much did the same thing. This time around, Max secured contracts with automakers such as Rolls-Royce, Bentley, and Alfa Romeo. It was a very successful enterprise, but due to the onset of World War II, he was forced to relocate. Paris served as a temporary home, but because conditions deteriorated here as well, he found himself in New York City.
Max Hoffman
He planned on setting up a venture similar to what he had in Europe, but there were a few problems. Foreign offerings were never particularly popular there, and demand for cars as a whole was down due to the global conflict. Hoffman used $300 in startup capital to start a costume jewelry business. After making a few calls, the company had $5,000 in orders from local retailers. Things only took off from there. When conditions finally cleared up, he was in a prime position to resume his importing operations.
He founded Hoffman Motor Car Company in 1947. The plan was simple: offer the best cars that Europe had to offer in the United States. Starting from a single Delahaye, his showroom grew to feature brands such as Daimler, Lagonda, and Lea-Francis. 1948 saw him become Jaguar’s official importer. Volkswagen agreed to a similar arrangement after sending him the very first shipment of US-bound Beetles. It sounds like a lucrative deal in hindsight, though at the time, both parties couldn’t wait to get out of the contract. The Beetle was a slow seller in these early years. Volkswagen offered to buy the distributorship back in 1952, and Hoffman happily accepted.
There was one bright spot in all of this. It was through Volkswagen that Hoffman came into contact with an emerging German sports car manufacturer: Porsche. At this point in time, the company built the 356. It relied on its agility more than anything else, though Hoffman thought there could be a market for a sportier convertible variant. Surprisingly, the automaker took his suggestion to heart and returned with the 356 America Roadster in 1953. This wasn’t quite the car he had in mind. It was priced out of contention with other convertibles on the market due in large part to its aluminum body. Production figures vary from source to source, but Porsche built somewhere between 16 and 21 examples during its only year on the market.
Any other company probably would have ignored Hoffman after that experience. Porsche was still all ears. He stressed the importance of price and urged them to come back with a less expensive car. The fruit of their effort was the 356 Speedster. They were able to meet an aggressive $3,000 price point by streamlining the tooling between the different body styles skipping out on creature comforts. Enthusiasts lauded it upon its autumn 1954 release and slotted Porsche among the industry’s best when it came to driver’s cars.
Porsche 356 Speedster
Hoffman also forged a relationship with Mercedes-Benz and became the brand’s exclusive importer in 1952. Jaguar pulled their rights in the process, though that was nothing compared to what was to come. He predicted demand for a road-going version of the W194 race car. They weren’t completely sold on the idea, but then Hoffman put his wallet on the line by pre-ordering 1,000 examples. Keep in mind that the project hadn’t even been officially approved at this point. It had a very short turnaround time. He asked for the car in September 1953 and it debuted the following February. The 300SL Gullwing found favor with buyers like the 356 Speedster, but on the other end of the market. Wealthy individuals were drawn to its strong power figures and outlandish styling. It was hardly on the market for a year before Hoffman asked for a convertible version. It took Mercedes a few years to iron out some of the Gullying’s engineering compromises. When it did come out it would certainly top the coupe’s asking price of $6,940.
Mercedes-Benz 300SL Gullwing
Hoffman worked out deals with other companies in the meantime. His intuition led him to success during his negotiations with Alfa Romeo. The brand developed the Giulietta Spider after he promised to take on 2,500 of them. It occupied the low end of the sports car market alongside the 356 Speedster. Another company also came into the picture around this time: a niche German automaker by the name of BMW.
The company was on the brink following World War II. Most of their factories were either destroyed or occupied by the Allied forces. BMW manufactured everything from cookware to bicycles to get by. When a manufacturing ban on aircraft and vehicles was lifted in 1947, it resumed motorcycle production and then began producing the 501 in 1952.
BMW targeted the sedan at the higher end of the market. Its starting price of 15,000 Marks was four times the average salary in Germany at the time. Considering this, its 64 horsepower inline-six engine left much to be desired. The car took a whole 27 seconds to reach 660 miles per hour and had a top speed of just 87 miles per hour. Although it wasn’t designed to be a performance car, the raw numbers were a serious hindrance. Competing cars from the likes of Mercedes outright embarrassed it. This issue was addressed in 1954 with the addition of a V8.
The 100-horsepower aluminum alloy engine first made its debut in the 502, which was essentially an even more upscale version of the 502. It made 100 horsepower in this initial iteration. Even with the increase in power, the cars still sold poorly. Fewer than 200 of them found buyers in its first year on sale.
BMW 501
BMW remained committed to its direction and considered ways in which it could expand its model lineup. The predicament gave Hoffman an idea. The sedan underpinnings and V8 engine could serve as the foundation for a sports car. He sold their cars in his showroom already, and while they never sold in huge numbers, he knew that the bones for something in that vein were already in place. Hoffman envisioned a sporting convertible that came in around $5,000. It would be positioned firmly above the 356 Speedster and well under the forthcoming 300SL Roadster. At that price, he thought he could sell 5,000 of them annually. There was little reason for the company to doubt him considering his track record. BMW agreed to explore the prospect of a sports car, and Hoffman introduced them to an up-and-coming designer.
DEVELOPMENT PROCESS
Count Albrecht von Goertz has had an interesting career in design, to say the least. The former banker-in-training emigrated to Los Angeles in search of greater opportunity. Goertz worked a series of odd jobs, including at a car wash and an aircraft factory. Southern California became the epicenter of the hot-ridding world and the scene dug its claws into his mind. He rented a garage on Rodeo Drive in 1938 and began modifying old Fords. It was here that he designed the Mercury-based Paragon show car. After fabrication work wrapped at a Glendale workshop, the car debuted at the 1940 San Francisco World’s Fair.
Goertz enlisted in the army that year. He relocated to New York City in 1945 and then had an unlikely encounter at the Waldorf Astoria Hotel. In his own words:
"There was a strange car in front of me, so I got out of my car to have a look at the other car and the man sitting in it got out to have a look at mine. This man was Raymond Loewy, a renowned designer".
The pair hit it off from there, and before Goertz knew it, he found himself working under the man designing Studebakers in South Bend. After this, he worked in a few other offices before establishing Goertz Industrial Design in 1952. The firm designed everything from clocks and fountain pens to sportswear and refrigerators. He built up quite a Rolodex in this line of work, and one of these contacts was Max Hoffman. The automotive magnate told Goertz of BMWs upcoming sports car and encouraged him to submit a proposal. The company liked his sketches so much that they gave him the assignment. By this point, the plan had evolved a bit. The convertible sports car would be complemented by a four-seat coupe and convertible. They believed that this would be integral to their success in the American market.
Goertz wasn’t the only person working on the project. BMWs own Ernst Loof was hard at work on an alternative proposal. He played an integral role in the development of the 328. After the war, he helped establish Veritas, a company that created numerous sports cars and racing machines. Its days of success were short-lived and the operation fell into bankruptcy. BMW purchased the company in 1953 and placed Loof in charge of their R&D Center at the Nurburgring. When they handed the sports car project down to the lab, they provided a chassis and engine and left them to their devices.
The car was quite a departure from BMWs design language. Veritas from days gone by had an obvious influence on it. This is best seen in the relationship between the grille and hood scoop. Loof showed it to management in Munich and to the public at a beauty competition in Bad Neuenahr. Even though the car won gold at the event, it was not selected for production. Hoffman was rather blunt with his thoughts, simply saying: “That will never sell.”Goertz’s proposal remained the favorite.”
Development of the cars was rather unremarkable, aside from one wrinkle. BMW handled work on the 507 themselves in Munich. The 503, meanwhile, was developed by Bauer in Stuttgart. This was a body working firm that previously worked on the 501. BMW took this unusual approach due to a lack of tooling and resources. They apparently couldn’t have two projects going on at the same time in Munich.
The cars relied heavily on the sedan’s underpinnings. The larger one kept the same wheelbase. To keep in character with the 507s sporting character, BMW shortened the wheelbase to 98 inches.
The engine received a power bump as well. In the 503, the number increased to about 140 horsepower. The 507 saw a further increase to 150 horsepower.
FAILURE TO LAUNCH
After 18 months of development time, the cars were ready for prime time, two 507s debuted at the Waldorf-Astoria in 1955. It was then shown at that year's Frankfurt Motor Show alongside the 503. Both cars were well-received at the event, with one outlet saying that it was “undoubtedly the showpiece of the entire exhibition. Another said that “the 507 touring sports car is a poem in itself, with which BMW will undoubtedly achieve great success.”
Production delays pushed deliveries well into 1956. The 503 was the first of them to reach customers starting in June. This was only possible because it had more closely related to its 4-door siblings than the 507. This did little to bring the price down, however. It came in at a price of 29,500 Marks. A 2005 BMW press release gives an idea of just how expensive this is. For that kind of money, one could purchase a terraced house or about seven Volkswagens.
BMW 503
This did not bode well for the 507, which began reaching customers in December. In the German market, it launched with a starting price of 26,500 Marks. In Great Britain, the car came in at a price of 4,201 GBP. For comparison’s sake, a Jaguar could be had for just under 1,700 Pounds while an Aston Martin cost about 3,900 Pounds.
The situation was more or less the same in the American market. At a price of $9,000, it was nearly twice as expensive as they anticipated. How could this have possibly happened? A major contributor to this was its hand-built aluminum chassis. We already know how this went for Porsche. The situation would’ve been bad enough on its own, though it looked even worse once the competition was taken into consideration.
The Jaguar XK150 and Chevrolet Corvette, coming in at roughly $4,500 and $3,600 respectively, would’ve served as worthy adversaries had the 507 been available at its intended price point. At around $10,000, the other cars appeared to be outright bargains. The Jag and Vette also came with significantly more power. While an automobile’s merits aren’t wholly communicated through a spec sheet, it was embarrassing for BMWs crown jewel to be shown up in this area this badly by offerings that were less than half the price.
BMW 507
It was also outclassed by cars at its price point. The closed-body DB4 was a closer match for the 503. The $7,475 touring coupe had a considerable power advantage over the Bimmer and also came from a more prestigious brand, which would likely factor into one’s purchasing decision.
One car illustrated this point better than any other: the Mercedes-Benz 300SL Roadster. The car that they developed from Hoffman’s suggestion was finally ready. Even though the famed Gullwing doors were no more, the SL was still among the most incredible cars on the planet. For just a bit more money, consumers could get a powerful, luxurious drophead derived from a Le Mans-winning race car. The 507, for as pleasant a highway cruiser it was, simply couldn’t compete.
Max Hoffman was none too pleased when he learned about the price. He claimed that he couldn’t sell the cars at that price. A brutal ultimatum to be sure, but it was probably in his best interest to cancel the deal. His newly-opened Frank Lloyd Wright-designed showroom on Park Avenue carried all manner of sports cars. Buyers likely would have chosen all of them over the 503 and 507. The cars were essentially dead on arrival.
Max Hoffman Showroom
BMW continued to support the cars for a few years. The first update for the 507 came in the summer of 1957. Up to this point, the company had only delivered 45 cars. The refresh introduced a more spacious interior, but this came at a cost. Series I cars had a 110-liter fuel tank behind the front seats. Series II models had a 65-liter tank located under the boot. Disc brakes also became an option in 1958.
The 503 faired a bit better than its stablemate by the time its update came around, selling 219 examples by December. Series II models introduced different trim execution at the rear. The brightwork kicked up at the rear on earlier cars. It was straightened out after the facelift. BMW also moved the shifter from the steering wheel to the floor. None of these changes did much to alleviate the situation.
Production finally ceased in December 1959. 412 503s were built in total. Of these, 273 were coupes and 139 were convertibles. The 507 fared even worse. 251 examples of the 507 were built in total. Only 39 of them were sold in the US even though it was intended to be its primary market. There were a couple of one-off cars as well. Raymond Loewy, the man who gave Goertz his start in the design world, tried his hand at improving upon the car.
Raymond Loewy Custom BMW 507
He bought a car off of the showroom lot and had the body removed. Then he had French coach builder Pichon et Parat fabricate a, uh, one-of-a-kind design. Some elements, such as the sloping rear deck, unusual wheel arches, and off-center hood emblem, would later be seen on the Studebaker Avanti in some form or another. It looks rather strange enough on its own, but everything starts to make sense once it’s taken in with his other custom cars.
Giovanni Michelotti had greater ambitions when he broke ground on a project of his own. Work on his car began in 1957. He purchased a bare chassis and had it delivered to Turin in September of 1958. Its shell was built by Ferrari bodybuilder Franco Scaglietti and the final assembly took place at Vignale. The finished product was shown to the public late in the fall of 1959 badged as the BMW 3200. It currently resides in BMW’s Mobile Tradition collection and is now known as the 3200 Michelotti Vignale.
BMW 3200 Michelotti Vignale
The failure of the sports cars combined with the middling sales performance of the sedans sent BMW into free fall. Strong sales of the Isetta microcar weren’t enough to dig them out of their hole. Other companies saw an opening for a hostile takeover. American Motors, Daimler-Benz, and the Rootes Group all had bids on the table. Daimler had an especially shocking plan for BMW if they managed to gain control. They intended for the company to become a mere body supplier. It was dangerously close to becoming a reality, but the deal fell through at the last minute. I’ve seen a few theories as to why this happened. One simply states that the board rejected the proposal upon further review while another attributes the failure to a major accounting blunder. Development costs were apparently placed into one year instead of being spread across multiple years, scaring off many potential suitors. Either way, the path was open for shareholder Herbert Quandt to increase his stake in the company from 30 percent to 50 percent. BMW’s future as an independent automaker was secure. It released the rear-engined 700 to commercial success and the rest is history.
Max Hoffman didn’t let the sports car debacle sully his relationship with the company. In fact, they went on to have a long-prosperous relationship. He sold off his other distributorships and placed his focus entirely on BMW. The company wanted to spread its wings and set up a dealer network of its own. Hoffman sold his company to BMW in 1975 and lived out the rest of his days at his estate in Rye, New York.