Austrian-born American importer Max Hoffman was likely the most influential automotive figure of the 20th century who never, so far as I know, worked at a car company. His taste was impeccable, his sense of consumer trends unmatched, and without him, it’s unlikely we’d have cars like the Mercedes 300SL Gullwing, the Alfa Romeo Giulietta Spider, or the Porsche 356 Speedster.
Those are not only legendary cars, it’s hard to imagine what sort of Porsche, Mercedes, or Alfa would have emerged were it not for them. In fact, it’s not even certain all of those companies would even be here if Hoffman hadn’t, one way or another, encouraged these cars to be made.
Before WWII, car-obsessed Hoffman used his racing career to become a sales representative for some of Europe’s biggest brands, but he had to escape Europe before the Nazis took over, which is how he ended up in New York. Hoffman was a natural businessman and temporarily found a new gig, as explained in his Automotive Hall of Fame biography:
Halfway across the world with no contacts to speak of, Hoffman had to make a living as a costume jewelry designer until he finally saved enough money to open Hoffman Motors in 1947. Hoffman’s first client was Jaguar, for which he was the exclusive importer from 1948 until 1952. Hoffman also was the exclusive importer of Volkswagen from 1949-1953, but was unable to make the Beetle a commercial success due to competition from domestic makes and stigma’s associated with buying German products. Undeterred, Hoffman was able to secure exclusive U.S. importing rights to Mercedes Benz in 1952 as well as Porsche. Other notable brands exclusively imported through Hoffman Motors include Alfa Romeo, BMW, Fiat, and Austin-Healey. Hoffman’s success was the result of his innate ability to know what his customers wanted. Also, because he was the entryway for many European brands into the growing U.S. market, he was in a position to make manufacturers listen.
Hoffman became something of a translator of American tastes for European brands trying to break into the continent. He told Mercedes they needed a street version of the 300 SL Gullwing, he instructed Porsche to make an affordable version of the 356 that ended up as the Speedster, and he told Alfa Romeo he’d buy the first 600 roadsters made off of the Giulia platform.
Today, Hoffman is fondly remembered by most brands he once worked with, though that’s maybe not true for BMW. His record with BMW is a little more mixed. Hoffman convinced BMW that it should make a sports car in order to shed its dowdy image after the war. This is what became the BMW 507 and it’s visually a success, but the car ended up being way too expensive and Hoffman couldn’t sell enough of them, which led to the company almost going bankrupt before being bailed out by Herbert Quandt.
BMW in the middle of the century was short on memory and long on forgiveness, giving Hoffman another chance to distribute its cars. This worked out well for the company, as Hoffman sold a lot of cars and maybe insisted BMW build a two-door version of the BMW 1500 complete with a 2.0-liter engine. The car was a smash success that set the tone for BMW to this day. BMW disagrees with this historical viewpoint, saying instead that it was “organic” while admitting that the Bavaria was Hoffman’s idea.
Either way, the price of Hoffman’s genius was working with Hoffman as a distributor, which had some downsides once the brand began to grow.
BMW North America exists in part because of cars like the 2002 and the work of Hoffman. The BMW offshoot is celebrating with 50 stories from the company’s 50 years, and this week it’s the tale of a young American exec in Europe named Bob Lutz squaring off with Hoffman, the older European living in America.
As BMW notes, the company was trying to shed distributor deals as fast as possible and switch to the more traditional model of selling cars directly to dealers as opposed to intermediaries:
Shortly after his arrival in Munich, Lutz began examining the contracts between BMW and its distributors. “In Germany, we were distributing cars directly to dealers, but we still had private importers and distributors in every major European country,” Lutz said in 2015. “The big distributors like Thodorof in France and Luigi Sodi in Italy got a distributor price way below the German dealer price, and since many of them had their own retail operations they had another margin. I showed von Kuenheim the profit and loss statements of the six largest European distributors, and their profit on 35,000 cars was higher than BMW AG’s for selling 200,000 cars.” [Note: BMW produced 164,701 cars in 1971, and 182,858 cars in 1972.]
In the US, the situation was much the same with respect to the balance sheet. The legal situation was far different, however. It took less than a year for Lutz and von Kuenheim to replace Thodorof with BMW’s first wholly-owned sales subsidiary, BMW France SA, and barely another year to do the same in Belgium and Italy. Where European law favored manufacturers over dealers and distributors, US law reversed that relationship, a disadvantage that BMW had compounded with its own distribution contracts.
According to BMW, the guy put in charge of sales, Paul Hahnemann, was happy to continue the tie-up with Hoffman for … reasons:
By then, Hoffman had lost nearly all of his other franchises, and BMW’s new sales chief, Paul Hahnemann, had thrown him a lifeline in the form of an arrangement that was mutually beneficial, in all likelihood.
Hahnemann was an effective salesman with a keen sense of product planning, but he was later revealed to be deeply corrupt. Upon taking over as BMW board chairman in 1970, von Kuenheim had ordered an internal audit that showed Hahnemann profiting personally—to the tune of at least one million dollars, and probably far more—by routing BMW’s advertising and printing contracts through his mistress, and at vastly inflated prices to boot.
Hanhemann managed to extend a contract with Hoffman into the 1980s, which is something Lutz was keen to undo.
Hoffman didn’t quite agree:
“Maxie offered me a substantial amount of money if I would stop trying to take the distributorship away from him,” Lutz said in 2015. Imitating Hoffman’s Viennese accent, Lutz recalled the distributor asking, “‘How much money do you make? You’re a nice young man. You’re very smart. I want to see you do well. I don’t think they’re paying you enough.’ I said, ‘Believe me, Maxie, I’m very satisfied with my financial arrangements.’ He said, ‘Ah, but I could make you so rich! If you’d cooperate with me, I could make you so rich!’ ‘I don’t want to hear it, Maxie.’”
Later, Hoffman told Lutz that he sold a lot of cars to Italian customers, with whom he was very friendly and who’d be angry if Lutz interfered with Hoffman’s business. “I said, ‘Maxie, come out and say it: If I keep trying to take the distributorship from you, you’re going to have me rubbed out,’” Lutz said. “He said, ’No, no, it’s only if there should be some unfortunate accident…’ It was like a bad movie.”
In a poignant twist, the law firm hired by BMW to help end the relationship was partnered by a BMW fan and owner who was irked at Hoffman over an inability to get parts or warranty work done. The company also contends that Hoffman wouldn’t order enough cars to meet an obvious demand so, after all the issues, it killed the distributorship agreement. It would go to court, but eventually, BMW got the rights to distribute its own cars in 1975.
And, as we know, Lutz managed to avoid getting clapped with concrete loafers and tossed in the Rhine.
Hoffman in German translates as farm or estate manager, so basically somebody who manages someone else’s property. Seems apt.
Hoffman had a great knack for product positioning that set BMW up well for success in the US in the early ’70s, but the products themselves definitely didn’t get the engineering they needed to suit American driving conditions until after BMW took over distribution, most particularly in terms of HVAC and cooling systems (which got better, but never good enough).
I had a ’73 Bavaria several years ago, one of Hoffman’s US-market specials. The huge selling point of the Bavaria when it launched in 1971 was its (barely) sub-$5,000 starting price. By ’73, the entry point had risen to over $7,000, and with a medium load of options, my car originally would have stickered for around $9,000, meaning the price rose nearly 30% without even coming close to being loaded. BMW definitely learned something from him in that regard.
My father had a 1970 2002ti and then a 1973 Bavaria, both bought new. I learned to drive stick in the Bavaria. I’m guessing your car had AC? That was a huge cost dealer add on and in my dad’s car, it never worked great.
Yep, A/C, which didn’t work at all by the time I got it, vinyl (extra cost, even though almost no cars were sold with the standard cloth), rear headrests, manual sunroof, radio. Didn’t have an LSD, alloy wheels, automatic transmission, power windows, power sunroof, or leather, most of which were included as standard on the new (in the US) 1973 3.0S, which stickered for around $13,000, IIRC.
1970s nonsense. What a time to be alive.