BMW was founded by Karl Friedrich Rapp originally as an engine manufacturer, Rapp Motor. Bayerische Motoren Werke GmbH was founded as a successor company to Rapp Motor on July 21, 1917.  The Milbertshofen district of Munich was chosen, apparently because it was close to the Gustav Otto Flugmaschinenfabrik site. The blue-and-white roundel BMW logo, which is still used (illustrated above right) alludes to the white and blue checkered flag of Bavaria. It is often said to symbolize a spinning white propeller on a blue-sky background, although this interpretation developed after the logo was already in use.
In 1916 the company secured a contract to build V12 engines for Austro-Daimler. Needing extra financing, Rapp gained the support of Camillo Castiglioni, Cornelius Jagdmann and Max Friz, the company was reconstituted as the Bayerische Motoren Werke GmbH. Over-expansion caused difficulties; Rapp left and the company was taken over by the Austrian industrialist Franz Josef Popp in 1917, and named BMW AG in 1918.
After World War I, the Treaty of Versailles (1919) prohibited the production of aircraft in Germany. Otto closed his factory and BMW switched to manufacturing railway brakes.
In 1919 BMW designed its first motorcycle engine, used in a model called the Victoria, which was built by a company in Nuremberg.
In 1924 BMW built its first model motorcycle, the R32. This had a 500 cc air-cooled horizontally-opposed engine, a feature that would resonate among their various models for decades to come, albeit with displacement increases and newer technology. The major innovation was the use of a driveshaft instead of a chain to drive the rear wheel. For decades to follow, the shaft-drive boxer engine was the mark of the BMW motorcycle.
In 1927 the tiny Dixi, an Austin Seven produced under license, began production in Eisenach. BMW bought the Dixi Company the following year, and this became the company's first car, the BMW 3/15. By 1933 BMW was producing cars that could be called truly theirs, offering steadily more advanced I6 sports and saloons (sedans). The pre-war cars culminated in the 327 coupe and convertible, the 328 roadster, fast 2.0 L cars, both very advanced for their time, as well as the upscale 335 luxury sedan.
World War II
BMW motorcycles, specifically the BMW R12 and the BMW R75 combination were used extensively by the Aufklärungsabteilung of German panzer and motorized divisions of the German Army, Waffen SS and Luftwaffe.
BMW was also a major supplier of engines; supplying the Luftwaffe with engines and vehicles, and the Wehrmacht with motorcycles. Planes using the aero-engines included the BMW 801, one of the most powerful available. Over 30,000 were manufactured up to 1945. BMW also researched jet engines, producing the BMW 003, and rocket-based weapons. BMW has admitted to using between 25,000 and 30,000 slave labourers during this period, consisting of both prisoners of war and inmates of infamous concentration camps such as Dachau.
The BMW works were heavily bombed towards the end of the war. Of its sites, those in eastern Germany (Eisenach-Dürrerhof, Wandlitz-Basdorf and Zühlsdorf) were seized by the Soviets. The factory in Munich was largely destroyed.
After the war the Munich factory took some time to restart production in any volume. BMW was banned from manufacturing for three years by the Allies and did not produce a motorcycle, the R24, until 1948, and a car model until 1952.
In the east, the company's factory at Eisenach was taken over by the Soviet Awtowelo group which formed finally the Eisenacher Motor-Werke. That company offered "BMWs" for sale until 1951, when the Bavarian company prevented use of the trademarks: the name, the logo and the "double-kidney" radiator grille.
The cars and motorcycles were then branded EMW (Eisenacher Motoren-Werke), production continuing until 1955.
In the west, the BAC, Bristol Aeroplane Company, inspected the factory, and returned to Britain with plans for the 326, 327 and 328 models. These plans, which became official war reparations, along with BMW engineer Fritz Fiedler allowed the newly formed Bristol Cars to produce a new, high-quality sports saloon (sedan), the 400 by 1947, a car so similar to the BMW 327 that it even kept the famous BMW grille.
In 1948 BMW produced its first postwar motorcycle and in 1952 it produced its first passenger car since the war. However, its car models were not commercially successful; models such as the acclaimed BMW 507 and 503 were too expensive to build profitably and were low volume.
In 1959 BMW's management suggested selling the whole concern to Daimler-Benz. Major shareholder, Herbert Quandt was close to agreeing such a deal, but changed his mind at the last minute because of opposition from the workforce and trade unions and advice from the board chairman, Kurt Golda. Instead Quandt increased his share in BMW to 50% against the advice of his bankers, and he was instrumental in turning the company around.
That same year, BMW launched the 700, a small car with an air-cooled, rear-mounted 697 cc boxer engine from the R67 motorcycle. Its bodywork was designed by Giovanni Michelotti and the 2+2 model had a sporty look. There was also a more powerful RS model for racing. Competition successes in the 700 began to secure BMW's reputation for sports sedans.
At the Frankfurt Motor Show in 1961, BMW launched the 1500, a powerful compact sedan, with front disc brakes and four-wheel independent suspension. This modern specification further cemented BMW's reputation for sporting cars. It was the first BMW to officially feature the "Hofmeister kink", the rear window line that has been the hallmark of all BMWs since then.
The "New Class" 1500 was developed into 1600 and 1800 models. In 1966, the two-door version of the 1600 was launched, along with a convertible in 1967. These models were called the '02' series—the 2002 being the most famous—and began the bloodline that later developed into the BMW 3 Series.
By 1963, with the company back on its feet, BMW offered dividends to its shareholders for the first time since before World War II.
By 1966, the Munich plant had reached the limits of its production capacity. Although BMW had initially planned to build an entirely new factory, the company bought the crisis-ridden Hans Glas GmbH with its factories in Dingolfing and Landshut. Both plants were restructured, and in the following decades BMW's largest plant took shape in Dingolfing.
In 1968, BMW launched its large "New Six" sedans, the 2500, 2800, and American Bavaria, and coupes, the 2.5 CS and 2800 CS.
Of major importance to BMW was the arrival of Eberhard von Kuenheim from Daimler-Benz AG. Just 40 years old, he presided over the company's transformation from a national firm with a European-focused reputation into a global brand with international prestige.
Already commercially successful by the mid 60s, in December 1971, BMW moved to the new HQ present in Munich, architecturally modeled after four cylinders.
In 1972, the 5 Series was launched to replace the New Class sedans, with a body styled by Bertone. The new class coupes were replaced by the 3 Series in 1975, and the New Six became the 7 Series in 1977. Thus the three-tier sports sedan range was formed, and BMW essentially followed this formula into the 1990s. Other cars, like the 6 Series coupes that replaced the CS and the M1, were also added to the mix as the market demanded.
From 1970 to 1993, under von Kuenheim, turnover increased 18-fold, car production quadrupled and motorcycle production tripled.
"The English Patient" - Rover
Between 1994 and 2000, under the leadership of Bernd Pischetsrieder, BMW owned the Rover Group in an attempt to get into mass market production, buying it from British Aerospace. This brought the active Rover, Mini and Land Rover brands as well as rights to many dormant marques such as Austin, Morris, Riley, Triumph and Wolseley under BMW ownership.
The venture was not successful. For years, Rover tried to rival BMW, if not in product, then in market positioning and "snob appeal". BMW found it difficult to reposition the English automaker alongside its own products and the Rover division was faced with endless changes in its marketing strategy. In the six years under BMW, Rover was positioned as a premium automaker, a mass-market automaker, a division of BMW and an independent unit.
BMW was more successful with the Mini and Land Rover brands, which did not have parallels in its own range at the time.
In 2000, BMW disposed of Rover after years of losses, with Rover cars going to the Phoenix Venture Holdings for a nominal £10 and Land Rover going to the Ford Motor Company. The German press ridiculed the English firm as "The English Patient", after the film. BMW itself, protected by its product range's image, was largely spared the blame. Even the British press was not particularly sympathetic towards Rover. Land Rover has since enjoyed a greater success as part of Ford's Premier Automobile Group.
BMW retained the rights to Mini, Rover, Triumph and other marques. MINI has been a highly successful business, though the other names have not been used yet. The Rover name has recently been sold to Ford after BMW gave it a first refusal offer in 2000.
In the early 2000s, BMW undertook another of its periodic cycles of redoing the design language of its various series of vehicles, under the auspices of newly promoted design chief Christopher Bangle. These designs often featured unconventional proportions with complex concave and convex curved surfaces combined with (sometimes arbitrary-appearing) sharp panel creases and slashes, a design cue called "flame surfacing" by Bangle. Much of the new language did not rest well with BMW enthusiasts or the automotive press which referred to the new designs as "Bangled" or "Bangle-ized". Bangle is commonly mistakenly believed to have penned all of the designs himself; however, he only chose which design was to be used. As Bangle has now been promoted within the company to the BMW Group Head of Design, leaving him in charge of not only BMW but also Rolls-Royce and Mini, some question what long term effect the disaffection of BMW traditionalists for these designs will have on sales, and on the company's future. Despite this, or maybe because of it, sales at BMW have increased every year since some of his most debated designs have gone into production.
Though many BMW enthusiasts zealously insist that BMW is the world's top selling luxury brand, new research indicates that their sales performance has not been as a result of their ever-growing skills in creating a luxury car. BMW's own in-house research showed that 75% of luxury car buyers do not even consider a BMW, considering it as a yuppie's car. Instead, BMW's research indicates, that BMW owners generally purchase BMW's for the crisp, sporty characteristics which BMW is famous for. As a result of this worrying research, BMW has redoubled marketing efforts to chase the top selling luxury car, the Mercedes-Benz S-Class.
Many aspects of the "controversial" designs are now beginning to surface in other auto manufacturer's designs, most notably Toyota, Audi, and Honda. Though the Bangle-butt design debuted and was popularized by BMW's 7-Series, Hyundai incorporated this design cue in 1999, three years before the 7-Series was released, and Maybach incorporated it since its first showing in 1997.
What is not as well known, however, is that Bangle was also responsible for many 'conservative' BMW designs and has worked at BMW for almost a decade. The first X5 sketches (which closely resembled the production car), were designed by him, and under his tenure the E46 3 Series came to be. Despite much of the scorn heaped on Chris Bangle, his design selections were approved by the entire executive board of BMW AG, including the majority owners, the Quandt family.
Production outside Germany
BMW started producing automobiles at its Spartanburg, South Carolina, plant in 1994. Today, the plant manufactures the BMW X5, the BMW Z4 Roadster and Coupe, and the BMW Z4 M Roadster and Coupe. The oft-rumored crossover vehicle, the X6, was recently confirmed by the Chairman of BMW's board as being under development for production at Plant Spartanburg.
Outside Germany, the largest output of the BMW Group comes from British factories. The Hams Hall plant manufactures four cylinder BMW engines for use around the world in 3-Series, 1-Series and Z4 vehicles. This is in addition to MINIs and Rolls-Royces made in Oxford and Goodwood.
The Spartanburg, SC plant is open six days a week, producing automobiles approximately 110 hours a week. It employs about 4,700 people and manufactures over 500 vehicles daily. Recently, the plant has undergone a major renovation switching from 2 production lines down to one. Now both the X5 and the Z4 are produced in the same line, one right after the other.
After a period of local assembly, BMW's Rosslyn, South Africa, plant now manufactures cars, with over 70% of its output destined for export. In the mid-1990s, BMW invested R1bn to make Rosslyn a world-class facility. The plant now exports over 50,000 3 Series cars a year, mostly to the USA, Japan, Australia, Africa and the Middle East.
BMW signed agreement in 1999 with Avtotor to produce cars in Kalingrad, Russia. Factory has been assembling 3 and 5 -series cars.
Starting from October 2004, BMWs intended for the Chinese market are produced in Shenyang, China. BMW has established a joint venture with Chinese manufacturer Brilliance to build BMW 3 Series and 5 Series that have been modified for the needs of local markets.
Starting in 2004, the X3 is manufactured in Graz, Austria by Magna Steyr with mainly German components.
In 2005, BMW Group built a new manufacturing facility in Egypt. This plant builds 3 Series, 5 Series, 7 Series, and X3 vehicles for the African and Middle East markets.
BMW opened a production plant in Chennai, India in 2007. This plant produces 3-series and 5-series vehicles. Showrooms are already present in all Indian metropolitan areas.
The BMW Group is considering the establishment of a new plant which will be located either in Volos, Greece or Limasol, Cyprus.These plants will be manufacturing motorcycles as well as the BMW 1 Series and the BMW 3 Series and will be serving the markets of Eastern Europe and Middle East.The construction will start in 2009 even if it is finally built in Greece or in Cyprus.