BMW can build a car exactly the way you want it, and fast. Now it has to convince Americans that's how they want to buy them.
He knew what he wanted. Kevin and Carrie Ann Dean chose to wait for their custom-ordered BMW.
Automakers would love to have more customers like Dr. Kevin Dean. When the 45-year-old oral and maxillofacial surgeon in Pensacola, Fla., went to a BMW showroom in April to buy a new X5 sport-utility for his wife, Carrie Ann, he wanted it all: titanium silver with a 5-liter turbocharged V8 engine; multicontoured, ventilated seats; navigation system; rear dvd entertainment system; and 20-inch alloy Y-spoke wheels.
Except the dealership, Sandy Sansing BMW, didn't have one with those exact specifications. Most dealers would then try to push another car on the customer. But with a few keystrokes the salesman, Terry Mills, alerted BMW's factory in Spartanburg, S.C. (and the 170 or so companies that supply it with auto parts) to make Dean's special order a priority. In four weeks the $78,000 car of his dreams was parked in Dean's driveway.
Vehicle customization on a mass scale has been the Holy Grail of the auto industry for more than a decade, with little success. Americans are an impatient lot. They've been trained to sacrifice a few features or accept a different color if they can get a great deal on a car they can drive home immediately.
James O'Donnell, BMW's most senior U.S. executive, wants to change that and, in the process, maybe change the way cars are made in America. BMW is launching a marketing push to convince more American consumers to order their car exactly the way they want it and take delivery in two to six weeks. To entice them, BMW will offer them unique choices and provide a video link of their car being "born" while they're waiting for delivery. The push coincides with a $750 million expansion at the Spartanburg plant to make room for a second SUV, the redesigned X3.
Today 15% of Americans custom-order their cars. BMW hopes to get 40% of its buyers to do it by 2015. "I'm convinced it will give us a competitive advantage against Audi and Mercedes," O'Donnell said.
By custom-building cars the way Dell ( DELL - news - people ) builds computers, he figures BMW can take slack out of the production process, reduce inventory carrying costs for dealers and avoid hefty rebates on cars that aren't selling. Evidence suggests that people like Dean who custom-order their car tend to load it up with more options, meaning fatter profit margins for both dealers and automakers. Customer loyalty improves as well. A survey by J.D. Power & Associates found that customers whose cars are equipped exactly the way they want it are more satisfied with their purchase.
O'Donnell and BMW colleague Gunter Klamer, a logistics specialist, had dabbled with custom ordering in the U.K. in the early 2000s. It wasn't truly custom-building: They merely filled orders from a huge central distribution center. O'Donnell, who moved to the U.S. in 2008, doubted it would work here until gas prices soared above $4 a gallon that summer and demand for smaller, fuel-efficient cars like BMW's Mini brand took off. Not only were customers lining up to order Minis, but they were ordering them with an average $2,000 worth of features. After gas prices fell back, half of Mini buyers still wanted to special-order their cars.
So in 2009 O'Donnell and Klamer suggested BMW use the rejiggering of the Spartanburg plant as an opportunity to try custom-building BMWs. By that time, however, the economy had collapsed, and many within BMW didn't think they could afford it.
But O'Donnell turned doubters into believers by freeing up precious dollars--an extra $6 million or so--to install the necessary technology and increase marketing. "We called their bluff and gave them the money," he said. "Gradually, people realized we were serious about making it work this time."
BMW's factory is already equipped to handle complex car production. It exports 70% of the vehicles it makes to more than 130 countries, each with its own regulatory requirements and consumer tastes. Also, instead of grouping features in a handful of popular packages like most carmakers, BMW sells many options à la carte. Thus, the plant could run two shifts seven days a week for six months and never build the same vehicle twice.
Most U.S. auto factories plan production several months in advance; special orders cause chaos or delays. (Ever askMcDonald's ( MCD - news - people ) to hold the pickles on a Big Mac?) BMW set up its ordering process to handle last-minute changes up to five days before production begins. The dealer's software is closely linked with BMW's manufacturing and procurement system, so special orders automatically ripple back to suppliers, ensuring the right parts are delivered at the right time.
With so many variations--2,500 possible wiring harnesses, for instance, and 9,000 center-console combinations--workers rely on overhead screens (like the ones short-order cooks use) to keep track of which vehicle they are building. Workers have 106 seconds to do each job. If one car takes less time, they use that extra time to preassemble parts for the next one.
Such complexity costs more than the typical manufacturing process, BMW admits (it won't say how much), but the benefits lead to higher profits for both BMW and its dealers.
For all its manufacturing flexibility, BMW's real challenge is a marketing one--getting Americans to be patient. "This is not an easy path that we've chosen," said Jack Pitney, vice president of marketing for BMW North America, who died as this story was going to press. "But those who take us up on it become brand ambassadors for us. That positive word of mouth will be worth far more than I could ever purchase in advertising."
