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Oliver Zipse

BMW Group plans over $32.5bn on future technologies

MUNICH, March 19, 2020

The BMW Group is embracing the transformation of the automotive industry with great confidence and investing heavily in research and development with a view to shaping the mobility of the future for the benefit of its customers.
 
In the context of the spread of coronavirus, the Chairman of the Board of Management of BMW AG, Oliver Zipse, pointed out in Munich: “Solidarity and responsible action are called for. In our society it is the duty of the strong to protect the weak. The BMW Group therefore fully supports the measures aimed at containing the spread of coronavirus.”
 
The BMW Group is responding to the foreseeable development  in demand on the global automobile markets by adjusting production volumes at an early stage and will make full use of the broad range of instruments available to it to maximise flexibility.
 
Manfred Schoch, General Works Council Chairman, emphasised the tools agreed jointly between management and the general works council: “In times of crisis, as we are experiencing right now, the General Works Council seeks to provide a clear sense of direction for associates. Our top priority is to protect their health, and safeguard their jobs and incomes. The General Works Council has agreed three important tools to make this possible: flexible BMW working time accounts, the option of working from home, and the latest company regulation on short-time work. This stipulates that the net income of a pay-scale employee at BMW must amount to at least 93 per cent of their usual sum. I am convinced that these three tools will allow us to navigate our staff safely through the corona crisis.”
 
Zipse went on to say: “We take our responsibility seriously, both when it comes to ensuring the protection and health of our employees and to achieving the best possible balance in terms of profitability. One thing is certain: coronavirus is here now, but there will also be a time after coronavirus. The approach we are taking clearly reflects the BMW Group’s ability to react quickly and flexibly.”
 
“New technologies are key to the future of mobility. Up to 2025, we intend to invest more than 30 billion euros in research and development to underscore our position as an innovation leader. This also expresses our confidence for the future business development,” said Zipse. “The ability to integrate diverse technologies to form a complete system is vitally important. Those companies capable of developing and combining hardware and software in equal measure will shape the future of the automobile. In this respect, we are quite clearly in the fast lane.”
 
In future, the BMW Group is also benefiting from strategic decisions taken at an early stage that have given it a definite competitive edge during this crucial phase of change for the entire sector. “We took decisive steps in the relevant strategic fields at the right time and are now intent on leveraging our competitive advantage to set ourselves apart from the industry trend,” Zipse continued.
 
The BMW Group set about achieving the new CO2 targets at an early stage, an important aspect of which was the decision to systematically electrify the model range. With its Performance > NEXT programme launched in 2017, further moves were made to achieve greater efficiency and a stronger operating performance. Moreover, over the past eight years, some 46,000 employees have received training in the field of electric mobility. 
 
In view of the growing importance of software know-how, the BMW Group founded the Critical Techworks IT joint venture in 2018 in order to secure the relevant expertise and skills. The BMW Group itself is one of the largest IT employers in Germany with 5,300 employees having been trained in the field of data analytics. 
 
Access to the raw materials needed to produce electric mobility has also been strategically secured. Since the beginning of the current year, the BMW Group has been procuring the required cobalt and lithium directly and passing those resources on to the suppliers involved in manufacturing battery cells.
 
At the same time, the BMW Group remains convinced of the importance of focusing systematically on customer needs and therefore on the innovations required to meet those needs. With this point in mind, efforts to broaden expertise in future fields of technology continue to be scaled up.
 
To compensate for the high upfront expenditure on forward-looking technologies, the BMW Group will continue to work systematically on achieving continual efficiency improvements as part of the Performance > NEXT programme.
 
"We have set ourselves clear targets for 2020. High priority will be given to profitability and free cash flow in our management of the business going forward. All measures and initiatives implemented in conjunction with Performance > NEXT are taking us in the right direction. With regard to free cash flow, we are specifically concentrating on capital expenditure and consistent management of working capital,” said Nicolas Peter, Member of the Board of Management of BMW AG, Finance. "We are already making measurable progress, which will continue to have a noticeably positive impact on earnings – whether in terms of sales, the cost of materials or indirect purchasing."
 
A key aspect in this endeavour is to develop even faster digital processes and leaner structures. The Performance > NEXT programme is expected to generate efficiency savings in excess of 12 billion euros by the end of 2022. 
 
Among other things, development times for new vehicle models will be reduced by as much as one third. On the product side, up to 50 per cent of traditional drivetrain variants will be eliminated from 2021 onwards in the transition to creating enhanced, intelligent vehicle architectures – in favour of additional electrified drivetrains. It is in this area that the full impact of these measures will come into effect, particularly in the years after 2022.
 
Moreover, the model portfolio is regularly assessed with a view to finding additional potential ways of reducing complexity. Potential for greater synergy and efficiency in indirect purchasing as well as in terms of material and production costs is also being leveraged throughout the Group. The BMW Group is also strengthening performance with an array of new models – especially in segments where the rates of return are highest. One of the Group's targets is to double its sales volume in the luxury segment from 2018 to 2020. -- Tradearabia News Service
 



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