BMW CEO Plans ‘Big Push’ in Models to Fend Off Audi, Mercedes

News | September 8th, 2010 by 18
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According to a Bloomberg report published today by BusinessWeek, BMW Group intends to expand the current range of BMW and MINI models in order to …

According to a Bloomberg report published today by BusinessWeek, BMW Group intends to expand the current range of BMW and MINI models in order to increase yearly sales with 55% over the next ten years. BMW Group is aiming thus at preventing its main competitors, VW Group or Daimler AG from becoming leaders in the industry.

The expansion of the current models range is just one of the strategies underlined in BMW Group’s plan of development.

Others include the product line extension, the focus on the small car segment, the expansion of the MINI brand, collaboration with others in terms of sharing the technology and power plants, and not ultimately, the focus on the Chinese market.

Let’s take these strategies one by one and see how they develop into actions.

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Additional production capacities.  BMW Group envisages the need of a new factory or the expansion of the existing facilities in order to support this future capacity growth. BMW Group’s plans for the long run include a sales target of more than 2 million cars in 2020, compared to 1.29 million in 2009.

As BMW CEO Norbert Reithofer said in an interview: “The big push in new models, entering new segments comes after 2012 […] If I look forward to 2020, then we have to think about additional capacity.”

BMW is currently using 90% of the capacity of its Europe-based plants, according to a report issued by IHS Automotive. At the same time, the European-based plants of its competitors are running at 77% (Volkswagen) and 73%, respectively (Daimler).

Expanded range of products. BMW plans to broaden the 6-Series line by adding a four-door version. The plans include also the expansion of the MINI model lines, with at least three new models in the works (Roadster and Coupe versions, plus the MINI Countryman) and the development of an urban car, battery-powered.

Going to the competitors’ side, Audi’s plans include the launch of a dozen models this year (A1 and A7 sportback included), and a line-up expansion of up to 42 vehicles by 2015 (from 34 in 2009).

Mercedes-Benz is also thinking of expanding its offer in the compact cars segment, with the help of French carmaker Renault SA, and electric cars for China.

Introducing new technologies. It is already well-known the intention of BMW Group to introduce the front-wheel-drive to the BMW and MINI family of products, in the compact segment.

Sharing technologies and powerplants In order to cut costs, BMW Group has constantly increased the number of parts shared between different car models. To achieve more savings, BMW is considering now selling its smaller engines to third parties.  BMW CEO recently said that “We’re also open to sharing our engine tool-kit system with a potential partner, but at the lower end rather than the six cylinders.”

Also, the Bavarian carmaker will continue its partnership with PSA Peugeot Citroen, which involves co-developing new four-cylinder gasoline engines, that will power the MINI vehicles after 2015.

Growing in China . BMW sales recorded an impressive growth in China, which has thus become BMW Group’s third biggest country, after US and its home-country, Germany. The growth rates on these markets are very different: while BMW sales in US increased by 10% in July this year, in China the increase was around 82%. Therefore, given the fact that US is a key market to BMW Group, and also the fact that China’s economy shows signs of slowdown, BMW aims at balancing these markets in the future, in terms of growth.

BMW Group is confident that all these actions will lead to increased sales and prevent competitors like Audi or Mercedes-Benz to takeover the lead in the top of premium carmakers.

BMW sales forecast indicate at least 1.4 million vehicles produced for the year 2010. In support for this high sales target, BMW CEO brings some clear evidence: the fact that the new 5-Series is sold-out, and that increased demand for the X1 model led to the add of a third shift in the Leipzig plant.

Its competitors have also increased their sales expectations: Mercedes is targeting a “double-digit” sales increase in 2010 (sales figure in 2009 was of 1.09 million cars). For the same year 2010 Audi targets a sales volume of more than 1.08 million cars.

[Source: Bloomberg via BusinessWeek]