BMW increases efforts to cut costs

Munich. BMW has increased efforts to cut costs and improve efficiency in response to a slack market, weak dollar and rising raw material prices.

BMW will increase productivity at its car plants by 5 percent a year, said production chief Norbert Reithofer.

Reithofer says facelifts of existing models should generally not have a start-up period, for example. And the development period for new models should be shortened.

"We started at 60 months and have now reached our target of 30 months," he said. "And the production start-up period for new models should no longer take nine or 12 months but five or less."

BMW strives not to have excess manufacturing capacity, Reithofer said.

"On average we aim for a utilization of 100 percent," he said. "If a plant fell below 90 percent, we would have made a mistake."

BMW is increasing capacity for the Mini because of consistently high demand. Reithofer said existing capacity at the Oxford, England, plant will be increased about 20 percent by 2007. The Oxford plant built 190,000 Minis in 2004.

"We will eliminate production bottlenecks within body manufacturing and in the paint shop," he said.

Reithofer confirmed that BMW is looking for a production location in India.

"Our scouts are out there," he said. "However, at first there will only be a (complete knock down) assembly plant."

Reithofer says that it is possible that Magna Steyr, the Austrian partner that builds the X3 SUV, could receive more contracts.

"When we think about future model series, Magna Steyr is a possible alternative, of course," he said, calling the company "a very good production partner."

BMW has become more flexible and innovations come faster now than at Toyota, Reithofer claims.

"In manufacturing quality Toyota's luxury brand Lexus is still ahead of us," he said. "There we haven't managed to overtake them yet."

Reithofer said BMW's goal is to be the best, noting he is not referring to German rivals Mercedes-Benz and Audi.

"Those two car manufacturers are not the quality benchmark for us," he said.

He said BMW's new plant in Leipzig will be state of the art in quality. He expects the plant to build almost 50,000 3-series models this year.

Tags: Automakers BMW

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