BMW becoming less favorable with suppliers

BMW becoming less favorable with suppliers

BMW has been a long time favorite of automotive suppliers but is now running into problems as it moves towards more cost-cutting methods of production.

“My impression is that BMW is now undertaking a shift from a company driven by technology to one driven solely by operating figures,” one supplier manager said.

As CEO Norbert Reithofer sets goal to raise BMW’s profit margin to between 8 to 10 percent by 2012, BMW will cut spending by 6 billion euros or about $8.7 billion by then. In the first half of 2007 BMW already achieved an operating profit margin of 5.5 percent.

Suppliers started voicing their opining after Manfred Schoch, deputy chairman of BMW’s supervisory board, suggested in an interview that BMW suppliers needed to offer some price concessions. During the interview, Schoch said that suppliers such as Conti, Bosch, Magna or ElringKlinger, generate better returns than BMW.

The comment forced union officials to express “amazement and dismay” at Schoch’s comment. In a letter to the BMW labor chief, IG Metall officials said that they found it “unbelievable” that he should be putting suppliers under more pressure

“In my view, it is alarming when someone on the union side excoriates suppliers for making a profit,” said Stefan Wolf, CEO of ElringKlinger, responding to Schoch.


Source: Automotive News (Subscription Required)

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