MOTOR SHOW: BMW Aims To Sell More Engines To Automakers
03 März 2009 - 6:19PM
Dow Jones News
BMW AG (BMW.XE) executive board member Klaus Draeger said
Tuesday the world's biggest premium automaker aims to sell more
engines to other automakers to generate additional revenue.
"Engine technology is one of our core strengths, and we want to
grow further in this market," Draeger told Dow Jones Newswires in
an interview at the Geneva auto show.
Automakers around the globe are squeezed by deteriorating demand
for cars, increasing the pressure to create additional revenue
outside their core business of selling vehicles.
BMW currently supplies engines to some niche carmakers such as
Wiesmann and also supplies boat engines in the 170 to about 300
brake horsepower range.
Draeger said the Munich-based automaker is still in talks with
Italian automaker Fiat SpA (F.MI) over possible cooperation
projects. He said, however, that plans for a joint production
platform for compact cars have been abandoned.
In July, BMW and Fiat signed an agreement on possible
cooperation and component sharing for their Mini and Alfa Romeo
brands aimed at reducing costs. A decision was initially expected
to be made by the end of last year, but faced a delay as talks
proved to be more complex than expected.
Fiat Chief Executive Sergio Marchionne at the time described the
proposed cooperation with BMW as a "significant cornerstone of our
strategy of alliances."
Draeger said BMW sticks to its target of keeping its capital
expenditure in a range between 5% and 5.5%, which is part of a
wide-ranging program dubbed Number One initiated to enhance the
company's efficiency. BMW's capex ratio in recent years often
exceeded 6% as BMW traditionally invested heavily in research and
development.
"We've launched more new models while at the same time investing
less...This shows that we made major progress in improving our
efficiency," Draeger said.
German peer Daimler AG (DAI), the maker of Mercedes-Benz cars,
has pledged to keep up its spending on research and development
despite the industry being battered by eroding sales. According to
previous company statements, Daimler plans to spend around EUR14
billion on research and development between 2008 and 2010.
BMW has been cutting about 8,100 jobs globally, with temporary
staff accounting for 5,000 positions, as part of a wide-ranging
cost-cutting target of EUR6 billion by 2012. BMW Chief Executive
Norbert Reithofer indicated earlier Tuesday that this target might
be exceeded.
Cutbacks on personnel costs are expected to lead to EUR500
million in cost savings this year. Reducing expenses in materials,
production and development are expected to account for two-thirds
of the planned overall cost reduction.
Draeger reiterated that BMW is still in talks over additional
cooperation projects with Daimler for example on joint purchasing
of certain components, but declined to elaborate on a timeframe for
taking decisions forward.
Both car companies focus on making luxury sedans and
sport-utility vehicles that often compete head to head, a factor
that has inhibited collaboration in the past. However, BMW and
Daimler already have a cooperation project together with General
Motors Corp. (GM) to develop hybrid technologies.
Auto makers around the world have been hit hard in recent months
by shrinking demand for new cars and tight credit markets amid the
financial crisis, increasing the pressure to enter alliances to
share costs and create synergies.
Company Web site: www.bmw.com
-By Christoph Rauwald, Dow Jones Newswires; +49 69 29 725 512;
christoph.rauwald@dowjones.com