Q&A: More opportunities for suppliers

BMW's head of engineering expects further cooperation - another BMW series for Magna Steyr is in sight

Munich. BMW board member Burkhard Goeschel spoke to Automobilwoche's Wolfgang Eschment about technology leadership, strategic partners and the problems with Formula 1.

BMW is planning more models and an entry in a new segment. Does this not lead to an increase in development costs?

Not necessarily and not directly proportional. We use a production concept that integrates and links the work processes of several vehicles or whole model series with each other from the very beginning. We already decide during the planning phase which model versions would be possible. Then we design them in such a way that they go through the same processes everywhere within engineering, production and at the suppliers. That way all these model versions can be derived from each other. This reduces one-off costs and brings about scale effects. Plus we can introduce new models quickly. Our plants' high flexibility also helps here.

Does the BMW model offensive make a budget increase necessary?

One always needs a little bit more each year. As we want to continue to grow I believe that costs will increase next year.

And you want to hold on to the technology leadership in specific areas, don't you?

This continues to be our aim. We pursue an innovation management, which means we generate ideas ourselves but we also buy ideas that are available on the market. We examine them to see if they are of use to BMW and if they are compatible with our products. And we give priority to innovations with which BMW can distinguish itself. These are then assigned to the individual brands and products, depending on where they are most suitable.

Is BMW able to cope with those complex goals on its own? Would you not need more external partners?

Yes. And we see it as being a special opportunity for us to operate with partners. We are specifically interested in medium-sized suppliers regarding innovations. However, in some cases they are not always able to realize their ideas in a profitable way. That is why we establish partnerships to turn those ideas into series products.

Does that mean that BMW will cooperate more with partners ?

Yes, the number of external partners will increase significantly. But we are also aiming for competitive advantages. We want those innovations to be exclusive to BMW for a certain period of time, even after the start-up of series production, to create scale effects.

And your suppliers receive more engineering and production contracts because of that?

We have clearly defined our core areas and we are looking after those ourselves. But there are wide areas where it makes sense to do the engineering together with suppliers. Suppliers have more production start-ups for vehicle equipment for example than we have. This can be very beneficial to us as these suppliers are totally up to date regarding costs and technology. I definitely see more opportunities here for suppliers and also for whole networks.

Are you planning new cooperations with automobile manufacturers?

We are already working in syndicates with other automobile manufacturers and suppliers to realize new solutions for the structuring of onboard networks and software within the automobile. The subject of hydrogen, which is mainly about technological matters, cannot be handled by one automobile manufacturer alone. This only works in cooperation with other automakers and the oil and energy industry.

You are building four-cylinder engines in a joint venture with the French PSA Group. Are there similar plans with other manufacturers?

At the moment there are none.

Your cooperation with Magna Steyr, which builds the X3 for you, seems to go well. Will they build other BMW models?

It is important to us who we make our strategic partner. It is about quality and the standard of cooperation. The chemistry between the two corporations needs to be right. In the case of Magna Steyr both parties have had extremely good experiences. The quality of the finished products is excellent. Therefore Magna Steyr has the opportunity to become a strategic partner of BMW's and to make another product for us beside the X3.

Is there a possibility that your future crossover model series, the so-called "functional space concept" will be built at Magna Steyr?

That will depend on which product line this concept will be based on. It could also be a totally different model.

Is this car not based on the 5 series? What is your definition of it?

Looking at our concept with front engine and rear-wheel drive it certainly does not make any sense to start at the very bottom. We do not just want to build a van and offer nine seats but we want to convey a sense of space and high functionality, and that with all the distinctive BMW features. This model series is a philosophical challenge. When driving the car it needs to feel like a BMW and the dynamics also need to be visible in the design.

The new BMW 1 series has these dynamics but the diesel models are not fitted with particle filters.

This is not about finding a technological solution but about availability for high volumes. There are only a few suppliers and the whole automobile industry wants them. That is why we have to take it more slowly. If the filters are available next year we will install them.

Which BMW 1 model will be launched on the American market?

The convertible might be more suited for the U.S.

Does BMW have the electronic upgrading within its vehicles under control now?

In regard to electronics we are concentrating our attention on the future and we want to generate a wide range of functions that are useful to our customers. The decisive factor for us is quality. I therefore do not have any apprehensions regarding electrics and electronics.

You will not reduce the number of electronic features like Mercedes?

No, not in principle. I will say it again: It is our aim to develop new applications that are of interest to our customers.

With the SLR, Mercedes has a super sports car in its range. Will BMW build a similar car?

There are no such plans. When building such a car one will almost never see it on the road. The few units that are being built disappear into well guarded garages. A vehicle like that is not a lucrative business idea and is only good for improving the brand's image and its market value. But that is why we spend money on our Formula 1 super sports cars, although we are not quite successful there.

When will things be looking up again?

The problem is that the engine's influence within Formula 1 has decreased this year. But we still have the strongest motor. The regulations now favor vehicles with a coherent overall concept. BMW will meet these requirements.

Where is your limit?

We should always be among the top three. And we have not achieved that this year. That is why we will completely change our approach in 2005.

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