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BMW Looks to Cut $5.5 Billion

News | June 19th, 2014 by 6
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According to latest reports, BMW CEO Norbert Reithofer is declaring war on costs: a nearly $5.5 billion war.The rising costs and lower profit margins are …

According to latest reports, BMW CEO Norbert Reithofer is declaring war on costs: a nearly $5.5 billion war.The rising costs and lower profit margins are the reason behind the plan.

The Bavarian Motors boss wants to cut between $4 billion and $5.4 billion in costs to keep the German maker’s profit margins between 8% and 10% in the coming years. In 2013, BMW reported a margin of 9.4%.

MINI brand is pointed out as one of the “bloated areas”, along with with the development of the 1 Series. BMW said in a released statement would seek to lower annual expenses “by several hundred million euros a year.”

BMW Looks to Cut $5.5 Billion

BMW plans to cut more than $135 million in labor costs, said Muenchner Merkur.

McKinsey & Co. was brought in to develop a plan that would run through 2020 to get those savings, Automotive News reported.

Arndt Ellinghorst, ISI Group’s head of automotive research says he expects BMW’s research and development as well as its capital outlays to peak this year, then decline until 2016.

[Source: TheDetroitBureau]

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  • A. Kuye

    This is as simple as STOP DILUTING THE BMW BRAND! Too many models being launched over the last 4 years, this leads to a bloated brand with too many product verticals to effectively manage. Keep the mini original – a mini SUV/JEEP is not needed, a mini wagon is not needed either. Keep mini original, simple and well engineered.
    The BMW brands should stay with the 3, 5, 7, X, and M series. Fewer product verticals equals better margins and better product focus. Your company is starting to act like American auto makers by trying to build a car for every type of customer. The BMW customer is exact in selection, performance and style, and they are willing to pay the premium for the quality and service that comes with it. Not everyone is this way.
    Just my two cents!

    • http://www.bmwblog.com Horatiu B.

      Good points

  • jason bourne

    Getting rid of the GT versions would help.

  • Freudeking

    This company needs to be warned about the lowering quality of their products and now they want to embark on even more cost cutting measures… QUALITY is one of the pillars for BMW’s success and since the current CEO took over, he has been cutting costs like crazy and this can be seen in the quality of the new BMWs. The number of recalls are at an all time high for the company the past few years every year! Look at the current 3 Series – I can see the cheapness of the car! Open the bonnet and see the complete mess, they don’t even bother covering some of the messy parts anymore, feels like I am opening a Toyota bonnet! Look at the tail pipe of the 3 Series (rear silencer) and compare it to the E90, that rear silencer looks like it will rust in 3 years’ time and look like it belongs on a Toyota! I do not see quality in new BMWs anymore, every time I see the 3 Series, I cannot help but notice the face that this car is the result of cost cutting. It is really a shame. I worry for the current owners how long their 3 Series will actually last….

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