Tough economic times are being felt throughout the auto industry, with no automaker being completely isolated from the downturn. Even luxury car makers such as BMW are feeling the pinch, which is why the German automaker’s CEO has announced further cost reductions.
Industry analysts predict that BMW’s profits will be down 40 percent this year, with the outlook looking just as bleak in 2009. In order to stop the bleeding, BMW CEO Norbert Reithofer has announced a new initiative to reduce the outflow of cash.
The first part of Reithofer’s plan called for the cancellation of BMX’s X7 program, according to Automotive News. Had the X7 made it to production, it would have been a large SUV intended to take on Land Rover ’s Range Rover.
Reithofer also canceled $128 million in construction costs allocated to the building of two new sales branches.
Interestingly, the cost cuts also involve BMW ’s hot-selling MINI brand. Reithofer wants to see a reduction in MINI’s production costs, and has also vowed to build the MINI and BMW X1 on the same platform if a deal between MINI and Fiat is not reached.
Labor cuts are also on Reithofer’s docket, with non-core functions – such as fleet-driver services and food-service functions – to be outsourced to outside companies.
