BMW Quality May Decrease
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BMW Quality May Decrease
December18
BMW is starting to fall out of favor with some of its suppliers, a new report finds. The German automaker is shifting its focus from quality and technology to cost and is pressuring its suppliers to provide more savings. BMW CEO Norbert Reithofer wants to increase the company's profit margin to between 8% and 10% a year by 2012 — up from its current level of 5.5% — largely by cutting spending.
According to Automotive News, suppliers are supposed to make up the majority of cost savings. "Yes, the pressure has increased," said the sales manager for one Bavarian-based supplier.
Many of BMW's suppliers were upset by comments made by Manfred Schoch, deputy chairman of BMW's supervisory board, earlier this year. "We've noticed that many suppliers, such as Conti, Bosch, Magna or ElringKlinger, generate better returns than we do," Schoch told the magazine Auto Motor und Sport in an October interview.
"In my view, it is alarming when someone on the union side excoriates suppliers for making a profit," responded Stefan Wolf, CEO of ElringKlinger.
BMW has been a long time favorite of suppliers because of its commitment to quality over price and its long-term contracts, but it appears as though any goodwill is quickly running thin.
