BMW aims to save $5.4 billion per year with cost cuts

Article by Christian A., on June 19, 2014

BMW chief executive Norbert Reithofer has tapped management consultants from McKinsey to help estimate the cost cuts to be able to save between $4 billion and $5.4 billion (EUR3 billion to EUR4 billion) annually, according to Manager Magazin. The business magazine reported that Reithofer was disappointed with costs at its Mini brand and for the BMW 1-series compact car, citing company sources.

The cost savings are targeted towards maintaining BMW's high profitability despite heavy investments in new drivetrain technologies, production expansion in markets like the United States, Latin America and China.

The carmaker wants to boost its global sales to 2.5 million by 2016 from almost 2 million in 2013, as it tries to stave off growing challenges from Audi and Mercedes-Benz.

Manager Magazin reported that Reithofer aims to maintain the carmaker’s profit margin between 8 percent and 10 percent – its automotive operations logged a return on sales of 9.4 percent.

The Muenchner Merkur daily reported that BMW intends to trim EUR100 million ($136 million) of German labor costs annually starting next year. Arndt Ellinghorst, ISI Group's head of automotive research, quipped the reports underscore BMW’s target of focusing on profitable growth and sustaining a high margin level.

He said in an e-mail to investors that the move by BMW is a strong proof that the carmaker is “mindful of the risk of complacency." He remarked that BMW's r&d costs and capital expenditure will reach its acme this year, and then drop to 7 percent and 5 percent in 2015, to 5.5 percent in 2016. [source: Autoblog]

Topics: bmw

If you liked the article, share on:

Comments

Recommended

In 2014, Jaguar Land Rover’s Special Vehicle Operations revealed the F-Type Project 7. At that time, it was said to be the fastest accelerating road car carrying a 5.0-liter Supercharged...
by - May 29, 2017
There is an ongoing rumor going around the automotive community, and it’s aimed at BMW. The rumor? The German marque has reportedly axed the i5 Electric vehicle concept. These supposed...
by - May 29, 2017
Volkswagen's yearly Worthersee affair that happens in Austria is considered a hotbed for all types of cars from the German company's long and renowned history. Most of the gathering features...
by - May 29, 2017
Behold, the Rolls-Royce Sweptail! The Sweptail is probably the biggest two-seater car that has ever been built. It may look odd at first glance, and you may not be fond...
by - May 29, 2017
BMW just keeps on getting bigger and bigger, in terms of their lineup I mean. Just after unveiling the 8 Series Concept, they are now teasing us with an M8...
by - May 29, 2017
Facebook

Youtube Channel

Tip Us
Do you have a tip for us?
Did you film an important event?
Contact us
Newsletter
Subscribe to our newsletter!
Subscribe
Galleries