BMW wants to reduce the production costs

In view of the corona pandemic and high raw material prices, the car manufacturer BMW remains on an austerity course. "We will reduce the production costs per vehicle by 25 percent by 2025 - compared to the level of 2019," said production manager Milan Nedeljkovic to the "Handelsblatt". Software for better planning of manufacturing processes, leaner logistics and better utilization of the existing plants should help. BMW also wants to take countermeasures: The group is expecting headwinds in raw material prices of up to one billion euros this year, because after the Corona crisis, many raw materials and intermediate products are scarce and poorly available, including steel. Due to delivery problems with electronic chips, BMW has a production backlog of 30,000 cars this year, which the company plans to catch up in the second half of the year. Because steel and chips are becoming more expensive, production costs would have to fall, according to the "Handelsblatt". The plans at BMW are hardly a signal for cheaper cars, especially since the car business is aiming for a return of eight to ten percent. In any case, a cost-cutting program from the time before the crisis is running, which was designed for a total of 12 billion euros from 2019 to 2022 and which included the cancellation of thousands of jobs that BMW no longer filled. In addition, the number of variants should be reduced significantly in order to reduce the complexity in production. This year, CEO Oliver Zipse is aiming for a delivery increase of 5 to 10 percent in sales - and with around 2.5 million vehicles, the level of 2019. In the medium term, however, the manager is aiming for growth to 3 million cars in this decade. The switch to electric drives should play into the cards for production manager Nedeljkovic in the planned cost reduction, especially from 2025. BMW wants to have 13 fully electric models on the road in the year after next. From 2025, the so-called "New Class" will replace existing technical architectures and focus primarily on electric drives. In 2030, the company plans to sell half of its cars worldwide with only electric motors. "The production of the New Class will be much easier because we will reduce both the complexity of the product and the manufacturing processes," Nedeljkovic told the newspaper. The BMW plant currently under construction in Debrece, Hungary, will be the blueprint for converting the existing factories, the manager said.