BMW completes materials cost-reduction program before 2012 deadline

Article by Christian A., on March 14, 2011

BMW has achieved its goal to reduce spending on components by 4 billion euros ($5.5 billion) more than a year earlier than expected, according to purchasing boss Herbert Diess. In an interview with Automotive News Europe, Diess said that BMW completed its materials cost-reduction program well ahead of its 2012 deadline.

Since 2007, the company had saved over 4 billion euros, enabling it to be at a competitive cost level with its material costs. He said that BMW now aims to focus on innovation and quality.

Diess, the BMW management board member tasked to undertake the cuts, said that suppliers have been complaining that BMW was fretting too much about cost-cutting.

Diess said that BMW’s strategy is “quite simple” as it doesn’t want to distinguish its product from rivals not because it’s cheap but because it is the best and most innovative. He said that BMW employs more quality engineers than purchasers and its quality is at a historically good level.

Diess didn’t give detailed figures but he said that its warranty costs fell further in 2010. He also predicted that BMW's purchasing volume will increase in 2011 compared to the purchasing volume of 28 billion euros in 2010. He said that BMW seeks to raise sales to over 2 million cars by 2020 so the purchasing volume will rise proportionally to its sales.

North America and Asia will benefit from the expanding purchasing budget. He shared that BMW has made a fivefold increase in its purchasing in Asia since 2009. But about 75% of this is from China. In the next few years, the share of purchasing from Asia within its global purchasing volume will climb substantially.

Topics: bmw

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