A Two-Cylinder Rear-Engine BMW Saved the Company From Extinction

When most people think BMW, they picture inline sixes, M cars, and the kind of German engineering that justifies a premium sticker price. What they do not picture is a rear-engine, air-cooled, two-cylinder economy car the size of a modern golf cart. But that is exactly what saved the Bayerische Motoren Werke from being absorbed by Daimler-Benz in the late 1950s. A 1963 BMW 700 Cabriolet heading to auction is a reminder that automotive history turns on cars that nobody expected to matter.

BMW's near-death experience

By 1959, BMW was in serious financial trouble. The company's post-war product lineup was bifurcated in a way that made no business sense. On one end sat the 507, a gorgeous V8 sports car designed by Albrecht von Goertz that cost more to build than BMW could charge for it. On the other end was the Isetta, a licensed Italian bubble car that sold in decent numbers but carried razor-thin margins. There was nothing in between — no volume sedan, no bread-and-butter product to generate the cash flow a manufacturing company needs to survive.

The board of directors was actively negotiating a merger with Daimler-Benz that would have effectively ended BMW as an independent company. The deal was close to done when a coalition of smaller shareholders and the Quandt family stepped in to block it. But blocking a merger does not fix the underlying problem. BMW still needed a car that could actually sell in volume and generate profit.

The 700 was that car. Designed by Giovanni Michelotti and engineered around a motorcycle-derived 697cc air-cooled flat-twin engine mounted in the rear, it was nothing like what BMW would later become famous for. It was simple, affordable, reliable, and — critically — it was fun to drive for what it was. The rear-engine layout gave it unusual traction characteristics, and the lightweight construction meant the modest output from the twin-cylinder engine was enough to provide genuinely entertaining performance on European roads.

The car that bridged the gap

BMW produced the 700 from 1959 to 1965 in coupe, sedan, convertible, and sport variants. Total production reached approximately 188,000 units — a massive number for BMW at the time and exactly the kind of volume the company needed. The revenue from 700 sales funded development of the New Class sedans that arrived in 1962, which established the template for every BMW sedan that followed: compact, well-engineered, driver-focused, with an inline engine up front.

Every M3 ever built, every 3 Series that defined the sport sedan category, every inline six that made BMW's reputation — all of it traces back to a two-cylinder economy car that the company built because it had no other choice.

The Cabriolet version heading to auction through Bring a Trailer is the rarest body style. The convertible 700 was built in far smaller numbers than the coupe or sedan, and survival rates for open cars are always lower. Finding one in presentable condition today requires either dedicated searching or significant luck.

Why ChromeAttitude cares about a German economy car

This site exists for the cars nobody else covers, and the BMW 700 fits that description precisely. It is not a classic BMW in the way that the 2002 or E30 M3 are classic BMWs. It does not appear in buyer guides, it is not featured at Bimmer events, and most BMW enthusiasts have never seen one in person. It occupies the same space in BMW's history that the Isetta occupies — acknowledged as important, rarely discussed in practical terms.

The parts situation for a 700 is predictably difficult. The motorcycle-derived engine shares some components with BMW's boxer motorcycle engines of the period, but the car-specific pieces — body panels, interior trim, convertible top mechanisms, and the unique rear suspension — are not in active reproduction. The BMW Vintage Club and European specialists maintain some parts inventory, and the simplicity of the car's mechanical systems means that a competent machinist can fabricate most of what cannot be sourced.

For collectors who are drawn to the oddball end of automotive history — the cars that should not have succeeded but did, the models that saved companies from oblivion, the machines that were more important than they looked — the 700 is one of the great stories. The fact that it is a convertible, rear-engine, air-cooled, two-cylinder BMW makes it a conversation piece that no amount of M-car ownership can replicate.