Skip to main content

BMW Aims to Cut Parts Costs by $2.4 Billion in E-Car Shift

BMW AG aims to cut roughly 2 billion euros ($2.4 billion) from its annual purchasing bill by squeezing spending on transmission components and other parts to help finance the shift to electric cars.

Amid plans to roll out at least 12 electric cars by 2025, Munich-based BMW is seeking to trim about 5 percent from costs for car parts alone, which currently totals about 40 billion euros yearly, Markus Duesmann, head of purchasing, said late Wednesday in an interview. That compares with a cumulative 4 billion-euro reduction that competitor Daimler AGis seeking in fixed costs, research and development spending and capital expenditures.

BMW, Mercedes-Benz owner Daimler and Volkswagen AG are projecting that battery-powered vehicles could comprise more than a quarter of their sales by the middle of next decade. The German carmakers are pushing for cost reductions to offset weaker margins for electric cars, which Stuttgart-based Daimler estimates could have just half the profitability of conventional models.

“The change in the industry that looms large is significant, it’s coming and there’s no longer the question of when -- it’s now,” Duesmann said in the interview at the Frankfurt auto show. “The number of balls we have to keep in the air is huge.”

The strategy at BMW includes reducing the range of custom options and boosting competition among component producers, Duesmann said. The manufacturer is set to rely less on buying parts from a single company and will work to cut the number of suppliers that have a monopoly position, he said.

BMW rose 0.6 percent to 84.59 euros as of 9:37 a.m. in Frankfurt trading, paring this year’s loss to 4.8 percent.

Profitability Pressure

The savings on conventional auto components are especially critical as overall procurement spending is set to rise by 2 billion euros to 3 billion euros by 2025 amid expenditures on electric cars, including new tooling, Duesmann said. BMW is also responding to the expected pressure on profitability by expanding its offering of lucrative high-end models like the 8-Series coupe and X7 sport utility vehicle.

BMW is also reducing so-called indirect costs, related to buildings and services, that amount to about 20 billion euros annually. After starting the program earlier this year, Duesmann said around 250 million euros in savings have already been achieved. The wider plan is to cut costs in this area by about 1 billion euros annually, he said.

“We’re trying to compensate for the higher investments the company is facing,” he said.

Labels:

Comments

Post a Comment

Popular posts from this blog

Floyd Mayweather Baby Mama Sues for $20 Mil ... He's a Despicable Liar

Floyd Mayweather could lose tens of millions of dollars from his big payday if his baby mama gets her way ... because she's just filed a lawsuit claiming he ruined her with lies to save his own ass. Josie Harris, who has 3 kids with Floyd, claims he lied through his teeth in an interview with Katie Couric just 2 weeks before the big fight ... when he claimed Josie was in a drug-fueled rage and he had to "restrain" her during their infamous 2010 domestic violence incident. Point of fact ... Floyd was convicted of domestic violence and spent two months in jail. Josie recounts her terror in the lawsuit, explaining how she and Floyd had broken up ... but he flew into a jealous rage that night, broke into her home and viciously attacked her while she was sleeping on her couch ... and her kids saw part of the beating. Harris says she is now labeled a drug addict thanks to Mayweather's lies -- and was embarrassed and humiliated on a global scale.   Her lawyer, Dan Friedl...
Post a Comment
Read more

Google Authenticator, a formidable layer of protection to your account.

​Google Authenticator is a free security app that can protect your accounts against password theft. It's easy to set up and can be used in a process called two-factor authentication (2FA) offered on popular social media services like Gmail, Facebook, Twitter, Instagram, etc.  The app ( iOS / Android ) generates a random code used to verify your identity when you're logging into various services. The code can technically be sent to your phone via text message every time— but the Google Authenticator app provides an extra level of security.  SMS-based 2FA has a  known security flaw , and any devoted hacker can attempt to  socially engineer  an attack against your phone company. The Google Authenticator app eliminates the possibility of an SMS-based attack  using algorithms  to generate the codes on your phone. Here's how to set it up: 1. Download Google Authenticator from either the Apple App Store or the Android Google Play store. It's free. 2. Nex...
Post a Comment
Read more

Are You Treating Your Kids Like Your Career?

And, we see this all the time. Hey,listen I've heard evidence of this phenomenon at the hairdresser, nail salon, at high school softball games, or at the grocery store. Mothers move in closer to each other and start to talk to one other very seriously and very competitively about their kids' achievements, successes, activities but certainly not about their disappointments, feelings, or emotional concerns. Nope, those topics are reserved for the night when those parents are alone with both the darkness of the night and their concerns. Now these are kids they are talking about, not careers. I'll tell you though that it sounds a whole lot like they are talking about jobs and job advancement. And, these kids who are their current careers, in my opinion, are at risk to become highly anxious and stressed as they struggle not to let their parents down. Don't kid yourself parents — your kids are desperately afraid of failing you. Want to figure out if your child has beco...
Post a Comment
Read more