BMW to up joint deals

14 February 2011

15 February 2011 | Adam Leach

BMW is considering expanding its joint purchasing deal with Daimler to include sourcing local supplies in China.

The German automotive company, which expects to make savings of about €100 million (£85 million) through an existing deal with Daimler, is thinking about growing its buying relationship to tackle the fast-growing Chinese car market.

BMW purchasing spokesman, Frank Wienstroth told SM: “Both sides fully agree that we do not want to invest in setting up totally separate supplier structures in China but look instead for potential overlaps.”

Responding to the news, John Henke, the CEO of Planning Perspectives, which compiles an annual report on car manufacturers and their tier-one suppliers, warned: “They’re going to have to be very careful about what goods they jointly purchase. When the engineers of one company see that they can do something quite differently with the products they are jointly buying that can gain them a competitive advantage. They may not want to tell the buyers what to get because then their competitors are going to find out about it.”

Wienstroth said BMW and Daimler have also agreed to extend the joint purchasing agreement to include components used in seats that don’t impact on the design or upholstery that consumers see. This development is the latest move by BMW to jointly purchase with rival companies. This month BMW also agreed a new joint buying deal with French manufacturer PSA Peugeot Citroën to develop hybrid parts for the electrification
of their vehicles.

Wienstroth said “economies of scale effects, sharing of development costs, using standardised components and a faster development process” were the main benefits of the partnership”.

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