Courtesy: BMW
By Craig Giammona
December 5, 2013

World’s Most Admired Companies Rank: 14

Headquarters: Munich
Employees: 109,871
The business: Production of luxury automobiles and motorcycles

BMW has a singular goal: to produce quality cars that are fun to drive. It’s a premium brand favored by wealthy Chinese, but the company has also capitalized on its name, which transliterates to “Bao Ma,” or “precious horse” in Mandarin. In the Chinese zodiac horses are symbols of grace, power, and strength. The German automaker has used its marketing power to boost Chinese sales even as headwinds buffeted Europe. Vehicle sales in China nearly doubled, from 168,998 sold in 2010 to 327,341 sold in 2012. The company reports it will set record sales worldwide in 2013, spurred by growth in Asia.

BMW started producing cars in 1928 and emerged from the tumult of World War II on shaky ground, only to be rescued by a German industrialist in 1959; in the 1990s it stumbled again after the purchase of the Rover Group. It does not forget its history. The company’s past navigation of economic turmoil has been a valuable asset through the long European recession, and BMW’s stock price has climbed more than 250% since the end of 2008. Today BMW is betting on electric models and new manufacturing techniques.

Driving east

In 2003, BMW opened its first factory in China. When CEO Norbert Reithofer took over in 2006, he continued the eastward push, opening a second factory in 2009, which led to a boost in revenue just as the financial crisis set in. In 2012, China accounted for 18% of the company’s worldwide sales, vs. 11.6% in 2010. In the third quarter sales in China increased 31% over last year, and accounted for 21% worldwide. “They were there early, and they’ve managed their brand well,” said Kristina Church, a Barclays analyst.

Clear vision

BMW takes the long view. In 2007, Reithofer, who joined the company in 1987 as the head of maintenance planning, launched “Strategy No. 1,” which established a series of growth targets stretching out to 2020. So far, BMW is hitting its marks — it has kept margins steady despite heavy capital investments in its burgeoning electric-car business, spending $5.2 billion on research and development in 2012, a 17% jump for the year. In the first nine months of 2013, R&D spending was up another 14%.

Auto first

At BMW the driving experience is paramount. Reithofer was production chief before he took the top job — the company likes to put engineers who know cars in leadership. “The management team are all engineers by background. They’re not just bankers,” Church says. Rather than put an electric motor in an existing model, BMW designed its first mass-produced electric car, the i3, from scratch so it can take engineering and design lessons from the electric production lines and use them on its standard models.

This story is from the December 23, 2013 issue of Fortune.

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