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BMW is tightening its austerity – economy

  • BMW wants to save 12 billion euros in the next four years, including through fewer engine variants and models.
  • In sum, no vacancies are to be canceled, but some are being transferred from the engineering and administration departments to IT.
  • Although the carmaker sold more vehicles in 2018 than in the previous year, sales fell slightly, and profits even increased by 17 percent. Above all, with exhaust emissions standards, price wars and trade conflicts BMW had to fight.

From Max Hägler and Veronika Wulf

The Munich-based car maker BMW is further tightening its austerity program. For example, the elaborate prototype construction is to be drastically reduced. By computer design 2500 models would be omitted, thus saving a third of the development time, said BMW CEO Harald Krüger at the presentation of the annual balance in Munich. At the same time, from 2021 up to 50 percent of the drive variants will be eliminated, meaning that fewer different engines will be produced. BMW also wants to save on the models: The 3 Series Gran Turismo, for example, will have no successor. Through these measures, the company wants to save 12 billion euros in the next four years.

In contrast to other manufacturers, the Bavarian car maker does not want to delete any spots. However, if the number of employees remains the same, the layout should be changed: Jobs in previous engineering and administrative areas will not be filled. Instead, especially IT specialists should be recruited. "We have increased natural turnover compared to previous years due to baby boomers," said Krüger.

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Last year, emissions standards, price wars and trade conflicts between China and the US weighed on earnings. The car manufacturer sold more vehicles than last year, but sales fell slightly, to 97.5 billion euros. The profit even slumped by 17 percent, to 7.2 billion euros. The dividend for shareholders will now be reduced accordingly. The profit decline will continue this year, BMW expects. The company expects additional costs of half a billion euros due to rising raw material prices and the strong euro alone.

"Our performance 2018 does not meet our high standards"

Saving – in the company's words: "cost management" – is common in the industry, so even under the cumbersome name "Performance Next" since 2017 at BMW saved. However, the circumstances and the choice of words are now rather unusual: "Uncertain environment" is mentioned. A company has to make sustainable money with its business model. And CFO Nicolas Peter admonishes: "Our performance 2018 does not meet our high standards."

Krüger had already made it clear during the weekend in an interview with the Süddeutsche Zeitung, under which BMW is: To develop electrically powered robotic cars would be a "well in the tens of billions" necessary. In addition to robotic cars and electrification, the company must drive forward the networking of vehicles and further optimize combustion cars. The parallelism of these developments is challenging and life-threatening: "We have to push ahead with electromobility, otherwise we will not achieve the CO₂ targets," said Krüger. "That would cost expensive penalties and not suit the reputation, and if we're not fast enough on autonomous driving, we're gone, too, fighting to stay as strong as we are."

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