Global bottlenecks
How BMW is defying the lack of chips while other carmakers are struggling
Cars stand on a conveyor belt at the BMW Dingolfing plant. BMW has cushioned the global chip crisis well.
© BMW AG / DPA
Corona lockdowns and the global lack of chips weighed heavily on the automotive industry last year. BMW nevertheless recorded the best result of its company history. Why is the carmaker defying the lack of chips while other carmakers are in a bad way?
While the chip shortage threw back production at many automakers, BMW posted record profits last year. Production director Milan Nedeljkovic explains to “Automobilwoche” why the Munich car manufacturer was so successful despite the lack of chips: “With a strong team from purchasing, logistics and the plants, for which every single unit counts”.
In addition, volume fluctuations can be compensated for very well and derivatives and variants can also be reacted to at short notice. “The second side is purchasing, the way we contract: making long-term commitments, having good forecasts, ordering early enough and also having the courage to see enough optimism to take on large volumes,” Nedeljkovic said the branch newspaper.
In 2021, BMW sold over 2.5 million cars, generated sales of EUR 111 billion, made EUR 16.1 billion in profit before tax and EUR 12.5 billion after tax. The carmaker from Munich installed the available semiconductors, the main component of chips, especially in more expensive and more profitable models.
Mercedes also benefited from the high car prices for new and used cars and the focus on expensive models. However, with a total of 2.43 million vehicles produced, there was a decrease of four percent compared to the previous year.
Luxury brands such as Bentley and Lamborghini as well as Tesla even reported record figures. Ford, on the other hand, had to postpone the launch of a new truck, and General Motors also had to shut down some production lines, which lost business. As a result, Toyota rose to become the top-selling automaker in the United States.
On Wednesday, however, BMW CEO Oliver Zipse predicted in Munich: “2022 will not be an easy year.” Because the Ukraine war slows down the BMW business. Instead of a forecast of eight to ten percent, BMW is now aiming for a profit of seven to nine percent.
According to Nedeljkovic, the cable harnesses, most of which come from the Ukraine and are experiencing a shortage due to the war situation, have been compensated by other markets. “Here is too [die] combination of a highly motivated team, flexibility and speed of reaction is the recipe for success,” says the BMW Board Member for Production.
Although there were production stops in Munich, Dingolfing and Oxford, BMW also has other wiring harness suppliers, for example from Mexico, North Africa or China. “We made use of these capacities in this bottleneck situation,” said Nedeljkovic.
BMW expects sales figures in 2022 to be at the same level as in the previous year
In addition to the continuing shortage of chips, the rising energy and raw material prices pose a challenge for the industry. According to CEO Zipse, the order books are “full to bursting”. However, BMW no longer expects growth, only sales figures at the level of the previous year and a significant increase in profits due to the full consolidation of Brilliance Automotive (BBA); BMW increased its stake in the Chinese manufacturer from 50 to 75 percent in February.
In the future, BMW wants to optimize the value-added processes and rely on “lean structures” and a “lean organization”, explained Nedeljkovic. A central point is flexibility. In addition, the carmaker wants to reduce the CO2 footprint and advance digitization with data science, artificial intelligence and virtualization. To this end, BMW has formulated the strategic vision “BMW iFactory. Lean. Green. Digital”.
Sources: automobile week, Business Insiderwith material from the dpa