GENEVA - BMW AG wants its German suppliers to cut prices by 20 percent over two years.
The move follows similar demands made on BMW's Rover Group suppliers. The total number of suppliers to the group could fall 50 percent in the drive for efficiency.
'The goal is to achieve 20 percent cost reduction over two years,' said Wilhelm Becker, BMW senior purchasing vice president.
By this summer, Becker said BMW will extend to Germany its COMPETE (Continuous Management Program for Efficiency and Technical Excellence) program, introduced in the United Kingdom. The program requires suppliers to bring cost-reduction ideas to BMW. The automaker then helps implement the ideas.
A team currently operating in the United Kingdom consists of about 50 purchasing and engineering specialists. Half the team comes from BMW and half from Rover.
'We have focused on Rover first because there is a lot to do at the moment to bring its suppliers up to world-class levels,' said Becker.
The aim is to bring BMW to a cost level comparable with mass producers in Europe. 'We are a long way from that,' he said.
Becker said the Rover program was launched in mid-January and is going well. 'A lot of U.K. suppliers have put in ideas,' he said. 'There is a lot of waste we can eliminate.'
The team is working on future models as well as the Rover 75, which failed to meet cost targets.
The problems were partly due to the strengthening of the British pound. But Becker said some United Kingdom suppliers were up to 15 percent less productive than suppliers in central Europe.
There are currently more than 1,500 suppliers to BMW and Rover.