The main share of cost savings in BMW’s strategy program “Number One” is supposed to come from Purchasing and Supplier Network (see my recent post).
It now turns out that the cost development for raw materials and existing contract clauses with suppliers play heavily against this strategy. Prices for aluminum and copper have increased by 22% since the beginning of 2008, the steel price has increased by 58%. Most of BMW’s suppliers have price adjustment clauses in their contracts which allow them to pass on these price increases to BMW. The drop of the US-Dollar vs. the Euro of another 10% since start of the year is another critical fact. At the same time sales are dropping in the US and Japan. With all these bad news will they still manage to reach their ambitious targets for this year?
Beginning of August BMW will present its numbers for the first half of 2008 – so let’s have a closer look then.
