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BMW falling out of favor with suppliers

12/18/2007, 10:01 AM

By Drew Johnson

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.

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12/18, 10:12 AM

posted by:

Madcapp

If that’s true, that’s going to be a huge mistake.

12/18, 10:31 AM

posted by:

Impulsive

Screw BMW … the vehicles are not worth their premium.

12/18, 10:35 AM

posted by:

injunraiv

Is this the Toyota model they’re following?

12/18, 11:25 AM

posted by:

LamborghiniZ

BMW’s are the best in their respective classes in nearly all scenarios, with a few notable exceptions being the 7-Series and Z4. Regardless, they are my personal favorites, and I’d almost always choose them over competitors. Impulsive, I suggest you save the premium you spend on a BMW and just cop a Taurus instead, it seems more likely to fit what you’d be into. Maybe the SE trim?

12/18, 11:33 AM

posted by:

lyndon_h

BMW is becoming walmart

12/18, 11:36 AM

posted by:

autonut

I guess it is tough to make a living if your work force will work only 35 hours per week all of the 40 weeks per years. Since this problem can not be addressed put a squeeze on suppliers.

12/18, 11:43 AM

posted by:

RicardoHead

Lambo, just remember to turn them over often or your will fall victim to the
……… B leed
……… M y
……… W allet
way of doing business.

12/18, 11:49 AM

posted by:

Veda

Err… ok their reliability and material quality aren’t great to begin with and with more cost-cutting on the supplier part? Can’t imagine…

12/18, 12:11 PM

posted by:

jackjimturkey

bad idea.
BMW should keep quality as high as possible, then pay the lowest cost it can for what it needs to keep the highest quality. Anything else is a disaster.

lambo: what’s better than a 7-series?

Beautiful
Masterpieces on
Wheels

or, if you prefer,

Bowel
Movement
Wagon

12/18, 12:29 PM

posted by:

Impulsive

‘Lambo’, you ignorant fool … nothing about any BMW is attractive to me. #1. They are all visually unappealing. #2. They are all unreliable. #3. They are MARGINALLY better in performance (despite having to resort to turboing after they vowed to avoid doing so) but SIGNIFICANTLY overpriced.

Worthless monkeys like you can buy into the image but you only buy into the greater monkey theory … someone else actually thinks you’re someone because you drive a Bimmer … I just think you’re an overpaying fool.

By the way, fool, besides spending time in the shop DURING warranty, get rid of it AFTER warranty … you’ll get raped by underengineered German garbage. But you know already … don’t ya, fool?

12/18, 12:37 PM

posted by:

CTS DRIVER

isnt it funny how all businesses are created to make a profit but the quest of making profits rise lowers quality…..every time.
.
.
jjt, in my case:
Big
Monsterous
Weiner.

12/18, 12:41 PM

posted by:

SR

Bet all you Bimmer bashers have never even driven one, let alone could afford one. I’ve owned three e46 coupes and all have been great cars with very minimal problems. Now I’m anxiously awaiting the 2008/9 M3.

It’d be interesting to know the ages of people who post on here and what they actually drive.

12/18, 12:45 PM

posted by:

CTS DRIVER

^sr , 2003 cts, 2003 5251 and a 2000 nissan frontier crew cab. does that help, there are other bmw owners here who will bash them just the same too.

12/18, 12:46 PM

posted by:

CTS DRIVER

jeez 525i

12/18, 12:47 PM

posted by:

CTS DRIVER

oh sorry i forgot, 33 years old. does that help any?

12/18, 1:00 PM

posted by:

lyndon_h

^SR
335 owner with Vishnu v1.47 owner, but i still bash them. WAY too many people treat them like car gods for my liking.

12/18, 1:01 PM

posted by:

inline6

It seems like BMW is getting fat and bored. Do we really think that the X1 and X6 are going to sell?

And a 1-Series coupe that costs $30k TO START in the US?

BMW is trying to find as many product niches as possible without taking a real risk.

What BMW needs to do is launch a lower-priced vehicle division (Triumph?) so that the engineers and designers can rise to the even greater challenge of building excellent vehicles whose successes would be contingent on competitive pricing.

12/18, 1:06 PM

posted by:

jackjimturkey

Impulsive: careful how you use the word “all.”

12/18, 1:21 PM

posted by:

CTS DRIVER

12/18, 1:22 PM

posted by:

F451

Do we sense a fundamental shift in the BMW world? If so, it is not for the better. Sounds like the strong arming of General Electric….and we all know the crappy results that can yield, let alone the crappy execs it produces (Nardelli).

12/18, 1:24 PM

posted by:

1c3d0g

O.o BMW, no no! This is not good at all. :-( If BMW follows this path I assure you nothing will be left of the once highly thought of car maker. Nothing tarnishes a brand faster than rapidly declining overall vehicle quality.

12/18, 1:31 PM

posted by:

Scarface03

Better than a 7-series? Hmm… everything in the class, except maybe Lexus, but the LS460 wins out on style. In my eyes, Audi has the crown for best full-size luxury, but only because I put the Quattroporte in a quasi-exotic category.

BMWs *are* overpriced, and I’ve always maintained that any performance gains (to the extent that the BMW outperforms its competitors) do not justify the costs. I have driven 3-series coupes and the X3, I’m not wildly taking stabs at BMW in the dark.

Anyone who takes a 3-series coupe over a G37 is nuts.

The market will decide who to keep happy–car companies or suppliers. If the price is too high, BMW will go elsewhere. If the quality isn’t there, BMW will have to pay a bigger price.

12/18, 1:47 PM

posted by:

Impulsive

‘SR’, you’re as ignorant as that schizo ‘Lambo’ monkey. Another fool whose worthless nonsense is to be ignored.

‘jjt’, yes, a generalization but I’d venture taking a survey of all shops to confirm what I, anecdotally, know. BMW and MINI experiences only confirm my belief.

‘Scarface’, tell the chumps how it really is. The reign is over.

12/18, 2:11 PM

posted by:

jackjimturkey

Scar: I like the ‘08, but would not say it is a superior car to the 7-Series. But that is a legitimate suggestion.

And yeah, the “four-door” is in another class.

Scar: I like the G37, and the only thing that would stop me from buying it is that it’s not Nissan-badged. Great car. 3-series is excellent, and It’s a BMW. Probably would take the CTS, if I were going for something in that area.

Impulsive: the reign, such as it is, will certainly be over if BMW takes this path.

12/18, 3:45 PM

posted by:

Impulsive

There never was a reign for me … I’ve seen the truth long ago. And I learned people are more akin to sheep than I ever thought. The foolish are easily fooled.

12/18, 6:06 PM

posted by:

jonmiles

Here comes Audi…

12/18, 7:20 PM

posted by:

jackjimturkey

Scar: I meant the A8, but you probably figured that out

12/19, 12:30 AM

posted by:

johnnycanuck

Oh this is long overdue. I hate to give Motor Trend credit for anything, but ever since the G37 beat the 335i BMW seems to have become increasingly cranky. No longer the uber queens of the pre-pubescent gas jockey set, perhaps they’re suddenly realizing that working for their Deutschmarks is not a right reserved exclusively for the proletariat. While I give them kudos for remaining independent in the face of automotive Wrestlemania, I find myself in agreement with the majority. BMW needs to remember why they are where they are, not how everyone caught up while they were busy revelling in their own glory.

12/19, 2:15 AM

posted by:

sharpie

Way to cheapen an otherwise good brand, BMW! Do that with whatever cheap brand you are trying to start and keep the BMW name as it is!

12/19, 4:41 AM

posted by:

josh

SR – I have a ‘96 316i. Hatch. And guess what… I love it!! I know how to turn a wheel better than most people on the road (sorry for talking myself up) and have beaten heaps of other high performance cars in a few “races”.

This guy in a 911 Turbo thought he was king **** in his Porsche. I flew around him on the outside and it was on. On the straights he passed me like i was in reverse, then he braked REALLY hard for the next corner, in which i flew past him again. This happened for 4 corners then there was a long straight and he was gone.

Those type of drivers seriously piss me off.

BAN LOW PERFORMANCE DRIVERS NOT HIGH PERFORMANCE CARS!!!

12/19, 12:43 PM

posted by:

AdamT

Oh BMW. I hate it that I’m not suprised. What happened to the days when the M3 had a high-reving 4 cyl rather than a 6 in order to save weight? Now even the new 1-series is over 3,000 lbs. Sharp, clean lines are now dull and round, and there’s even a SUV. I knew it was over when the SUV came out. Porsche certainly can’t be far behind. I still lust after the pre-2000 car (E30 M3, please). But somewhere along the line BMW took its eyes off the prize. Or rather, the prize changed from being the Ultimate Driving Machine to being the Almighty Dollar.

12/20, 9:13 AM

posted by:

DeansterTJ

I know know why everyone’s ragging on that X6. It looks like a stunner to me: swoopy lines, aggressive stance. I like it – it would be perfect for where I live, snowy Canada.

Anyways, I think the 5 and 7 series are excellent vehicles, but I think the 3-series is the most overpriced, wrongly-hallowed, over-exalted car in the world. I drove a 330 Ci like I stole it once, and I’ll say it again: my girlfriend’s Mazda3 GT was a BETTER, MORE FUN RIDE.

 
 
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