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

A lot of people have been questioning BMW’s design direction lately, albeit the beautiful Z4 concept and the alluring 8 Series concept are excluded from this narrative. This began after...
by - September 20, 2017
We first saw the Galibier Concept eight years ago when Bugatti unveiled it. But today, it seems like they still have not given up on the development of an ultra-luxury...
by - September 20, 2017
With all the hype surrounding the Dodge Challenger SRT Demon, it seems that it will be one of the most successful vehicles from the automaker even before it hits the...
by - September 20, 2017
McLaren Special Operations’ (MSO) latest project pays tribute to the racing homologation car from 1997 - that is the F1 XP GT “Longtail”. Today, they have styled six new McLaren...
by - September 20, 2017
Alfa Romeo’s much anticipated launch of a new larger sedan has been put off by at least three more years as reported by Automotive News. What was supposed to arrive...
by - September 20, 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