New Ytest
Sign out
Bimmerpost
Login
BMW E39 5-Series Forum | 5Post.com
BMW Garage BMW Meets Register Search Today's Posts Mark Forums Read  
Go Back   BMW E39 5-Series Forum | 5Post.com > BIMMERPOST Universal Forums > General BMW News and Cars Discussion

Post Reply
 
Thread Tools Search this Thread
      05-19-2008, 11:54 AM   #1
jdink
Major
jdink's Avatar
United_States
52
Rep
1,332
Posts

 
Drives: '08 E90 335i 6MT
Join Date: Jan 2008
Location: Portland, OR

iTrader: (0)

The Wall Street Journal: "BMW, Mercedes Mull a Parts Pact"

Daimler, BMW Discuss Linkup on Components

http://online.wsj.com/article/SB1211...ess_whats_news (Link may only work for WSJ subscribers)

By EDWARD TAYLOR

The Wall Street Journal: Monday, May 19 2008 - Vol. CCLI No. 117

BMW AG and Daimler AG's Mercedes-Benz Cars division are in talks to explore teaming up in developing, producing and purchasing car components, according to people familiar with the matter.

The move marks a recognition by Germany's archrival luxury car makers that they may need bigger economies of scale to bolster profits.

Executives and engineers from the car divisions of BMW and Daimler "from the top, right down to the middle management" are discussing how the companies could jointly buy car parts, including seat frames and air-conditioning modules, said one person familiar with the talks.

The two sides are also exploring possible cooperation, on a project-by-project basis, in developing and producing components, including engines, according to another person familiar with the matter.

People familiar with the talks said the companies aren't under any short-term pressure to reach agreements.

The shift in strategy responds to difficulties the two midsize German auto makers face in maintaining their profit levels, now among the highest in the industry, in the face of a struggling U.S. economy, a strong euro, the rising price of raw materials such as steel, and growing technological demands created by new fuel-efficiency and emissions rules.

Spokesmen for both Daimler and BMW said the two companies are exploring further cooperation on components, but declined to reveal specifics.

Both car companies focus on making luxury sedans and sport-utility vehicles that often compete head to head, a factor that has inhibited collaboration in the past. The current talks seek to identify components and technologies where both companies could cooperate on lowering costs without diluting their brand values or conceding a competitive advantage, said one of the people familiar with the talks.

The shift toward increased cooperation has evolved following a strategic rethink at BMW initiated by Norbert Reithofer, who became chief executive in September 2006. A year after taking the helm, Mr. Reithofer set a goal of "establishing collaborations in the areas of components, drive systems and modules." Daimler Chief Executive Dieter Zetsche has also been repositioning his company after the sale of Chrysler last year.

Mr. Reithofer sees Daimler and BMW as "two midsize manufacturers," and believes there is potential for further cooperation between them, a spokesman for BMW said. Both Mr. Reithofer and Daimler's Mr. Zetsche have been encouraged by progress on an existing cooperation project between Daimler, BMW, General Motors Corp. and Chrysler LLC to develop expensive hybrid technologies.

Both Daimler and BMW in recent months have appointed key executives to head "profitability teams" to explore ways to increase their profits. Daimler appointed Jerome Guillen, a truck unit executive, to head up a "business innovation" team. BMW appointed a finance executive from its motorcycle division, Fritz Geri to perform a similar task at the auto maker.

Other high-end car makers face similar problems. But rivals such as Audi of Volkswagen AG, Ford Motor Co.'s Volvo and Lexus of Toyota Motor Corp. are able to leverage the resources and scale of larger parent companies. Sharing parts and research, plus making bulk purchases of raw materials such as steel allow them to squeeze costs. BMW and Daimler, in contrast, don't have larger parents.

Audi, for example, has been able to use VW's diesel-engine technology and is benefiting from VW's economies of scale in purchasing. VW makes more than six million vehicles a year, including more than 900,000 Audis. Lexus has been able to launch a hybrid luxury sedan thanks to hybrid technology pioneered for Toyota, which makes almost nine million vehicles a year.

Audi's operating margin rose to 8% last year, from 6.5% in 2006, according to analysts at Citigroup. BMW, by contrast, saw its margin on automobiles drop to 6% last year, from 6.3% in 2006, in part because of the cost of investments in green technologies. That's putting at risk BMW's target of 8%-10% operating margins by 2012.

BMW and Mercedes-Benz have been fierce competitors as far back as the 1930s. The rivalry became acute after 1959, when Stuttgart-based Daimler, which makes Mercedes-Benz cars, offered to buy its smaller rival, Munich-based BMW, and was rejected.

Both BMW and Daimler in recent years extricated themselves from disastrous mergers with mass-market brands that were made in earlier attempts to gain volume. BMW took a €3.15 billion charge at the time to sell off United Kingdom firm Rover in 2000, while Daimler effectively gave away an 80% stake in Chrysler in May 2007, after paying $36 billion in 1998.
Attached Images
 
__________________

Last edited by jdink; 05-19-2008 at 12:16 PM..
Appreciate 0
      05-19-2008, 12:03 PM   #2
jdink
Major
jdink's Avatar
United_States
52
Rep
1,332
Posts

 
Drives: '08 E90 335i 6MT
Join Date: Jan 2008
Location: Portland, OR

iTrader: (0)

Quote:
Originally Posted by jdink View Post

The shift in strategy responds to difficulties the two midsize German auto makers face in maintaining their profit levels, now among the highest in the industry, in the face of a struggling U.S. economy, a strong euro, the rising price of raw materials such as steel, and growing technological demands created by new fuel-efficiency and emissions rules.
It sounds like BMW and Mercedes are facing hard times due to the looming US standards of 35 mpg (across all cars in a fleet) for 2015.

i.e. if you have one car that gets 70 mpg, you can have one that gets 1 mpg and meet the standards.

http://www.usatoday.com/money/autos/...my-rules_N.htm

Basically, because of the markets that BMW and Mercedes cater to, they will have a harder time with meeting these regulations. In order to do so they are going to have to spend a LOT of money, for which the return might not be so great due to their size.
__________________
Appreciate 0
      05-19-2008, 12:34 PM   #3
!Xoible
Banned
United_States
823
Rep
46,029
Posts

 
Drives: ....
Join Date: Nov 2006
Location: .

iTrader: (4)

Garage List
2008 M3  [4.00]
2007 335i  [9.00]
2008 528i  [8.00]
2006 Infiniti - G35 ...  [8.00]
oh no! bad move. i wish it was Porsche that BMW picked
Appreciate 0
      05-19-2008, 01:02 PM   #4
BMW F22
Major General
BMW F22's Avatar
United_States
3540
Rep
9,785
Posts

 
Drives: ///M235i
Join Date: Nov 2005
Location: Bay Area

iTrader: (8)

Hmmm very interesting. I guess we'll have to wait to see how it will unfold.
Appreciate 0
      05-19-2008, 06:21 PM   #5
ianbiz
Back in a BMW
ianbiz's Avatar
United_States
202
Rep
5,208
Posts

 
Drives: 2015 335i Msport
Join Date: Jul 2007
Location: Dallas, TX

iTrader: (8)

They both already outsource a lot of parts to the same people. My former E46 and my dad's W203 have same EXACT jack, jack mounts, tools and stuff all made by Heyco I think. Headlights are outsourced to hella or bosch (can't remember), and even the wiring is done similarly.
__________________
Ian
Appreciate 0
      05-19-2008, 06:27 PM   #6
Dubbedoutbimmer
Banned
United_States
43
Rep
1,310
Posts

 
Drives: 335XI Coupe Loaded w/body kit
Join Date: Feb 2008
Location: Boston

iTrader: (-1)

Quote:
Originally Posted by cars4lyfe View Post
how much worse can reliability get? yay, let's all share each other's crappy parts. Next year, a 2010 c class owner will be bitching about his fuel pump!
LMFAO HAHAHAHAHAHAH
Appreciate 0
      05-19-2008, 07:10 PM   #7
chuck92103
Major
chuck92103's Avatar
91
Rep
1,209
Posts

 
Drives: 2011 535i
Join Date: May 2008
Location: Socal

iTrader: (0)

Quote:
Originally Posted by jdink View Post
It sounds like BMW and Mercedes are facing hard times due to the looming US standards of 35 mpg (across all cars in a fleet) for 2015.

i.e. if you have one car that gets 70 mpg, you can have one that gets 1 mpg and meet the standards.

http://www.usatoday.com/money/autos/...my-rules_N.htm

Basically, because of the markets that BMW and Mercedes cater to, they will have a harder time with meeting these regulations. In order to do so they are going to have to spend a LOT of money, for which the return might not be so great due to their size.

The ones that will really get screwed are GM, Ford and Chrysler. All three of them sell large trucks and SUV's the most.
__________________
2011 535i
2008 VW GTI
Appreciate 0
      05-20-2008, 11:21 AM   #8
jdink
Major
jdink's Avatar
United_States
52
Rep
1,332
Posts

 
Drives: '08 E90 335i 6MT
Join Date: Jan 2008
Location: Portland, OR

iTrader: (0)

Quote:
Originally Posted by chuck92103 View Post
The ones that will really get screwed are GM, Ford and Chrysler. All three of them sell large trucks and SUV's the most.
Not exactly.... they have large economies of scale so they can do this, where BMW and Mercedes don't.

Its not that if Ford sells 10x 10mpg SUV's that it has to sell 10x 70mpg hybrids. They could sell 1000000 10 mpg suv's and 10x70 mpg hybrids and meet the US fleet standards. Would it be very profitable for them to develop a car that sells 10 units? not really... (thats where BMW gets screwed)
__________________
Appreciate 0
      05-20-2008, 12:13 PM   #9
E90330iS
Major General
Germany
143
Rep
6,333
Posts

 
Drives: BMW M4
Join Date: Jan 2006
Location: Arcadia, California

iTrader: (56)

Garage List
2006 330i  [0.00]
interesting..
__________________
Appreciate 0
      05-20-2008, 03:06 PM   #10
Davin
Lieutenant Colonel
Davin's Avatar
Trinidad_and_tobago
52
Rep
1,721
Posts

 
Drives: Yes
Join Date: Mar 2008
Location: Trinidad & Tobago / NYC

iTrader: (0)

Well, we will see how it goes!!!
Appreciate 0
      05-20-2008, 05:14 PM   #11
155MPH
Major
155MPH's Avatar
United_States
61
Rep
1,379
Posts

 
Drives: E89 Z4 sDrive28i M Performance
Join Date: May 2007
Location: South Jersey Shore

iTrader: (0)

Garage List
Quote:
Originally Posted by jdink View Post
i.e. if you have one car that gets 70 mpg, you can have one that gets 1 mpg and meet the standards.
Ummmm...not so sure it is that simple. There is a volume/mix factor in that equation.
Appreciate 0
      05-20-2008, 05:31 PM   #12
Davinhci
Colonel
Davinhci's Avatar
United_States
55
Rep
2,484
Posts

 
Drives: 08 M3 E92 & 08 E70 X5 4.8
Join Date: Mar 2008
Location: Austin, TX

iTrader: (6)

Garage List
2008 M3  [0.00]
wow, we'll see what happens
__________________

08 E92 AW M3 | HRE P40 19" | APE Air Filter | BMW Performance Grills | White Side Gills | CF Mirror Covers | BMW Performance Pedals | F1 Pinnacle Tint | V1 Hardwire | Dinan Performance Software | Gintani Exhaust | H&R Sports Springs | RPI Scoops | BMW CF Spoiler | Challenge Diffuser | Lux H8 V3 | LCI Tail Lights |
Appreciate 0
      05-21-2008, 07:33 AM   #13
SE3P_to_E90
Banned
United_States
224
Rep
3,031
Posts

 
Drives: E90 Msport + E83 Msport
Join Date: Jun 2006
Location: MD

iTrader: (29)

economies of scale...
the fact that they might collaborate their efforts in the development of engines is what's killing me the most.
Appreciate 0
Post Reply

Bookmarks

Thread Tools Search this Thread
Search this Thread:

Advanced Search

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off



All times are GMT -5. The time now is 06:15 AM.




5post
Powered by vBulletin® Version 3.8.11
Copyright ©2000 - 2024, vBulletin Solutions Inc.
1Addicts.com, BIMMERPOST.com, E90Post.com, F30Post.com, M3Post.com, ZPost.com, 5Post.com, 6Post.com, 7Post.com, XBimmers.com logo and trademark are properties of BIMMERPOST