BMW Investigates Cost-Cutting Strategies

By | June 19, 2014
With the automotive market becoming more and more competitive, automakers are pushing to create new product to help keep market share. The downside to this? Costs rise, and when products don’t do as well as expected, that money goes down the drain. To help solve this problem, BMW CEO Norbert Reithofer has hired consultants from McKinsey to create a cost-saving strategy that will potentially save the company between $4 billion and $5.4 billion annually. Already, BMW has a few ideas in where they can cut costs. The need for this plan stems from poor sales of the BMW 1 Series and for the Mini brand as a whole. Earlier this week, BMW made an announcement that in order for the company to remain competitive with other automakers, it would need to lower expenses "by several hundred million euros a year." Further helping to offset the dismal sales figures, BMW hopes to increase global vehicle sales to around 2.5 million by 2016. But with strong competition from Mercedes-Benz and Audi, that may be easier said than done. To make this strategy work, BMW will cut $136 million in German labor costs annually starting in 2015, according to the Munich newspaper, Muenchner Merkur. Source: Automotive News (Subscription Required)