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BMW change strategy

BMW has made the rare move of admitting that its performance is not up to scratch.

But it was PBT (profit before tax) rather than BHP that was disclosed as deficient in the board's announcement of strategy change last week, September 27.

The man to take care of delivery of better operating margins is Dr.Michael Ganal, the former marketing and sales director who has been responsible for ordering more and more performance cars for supply to world markets. He is swapping jobs with Stefan Krause who has been the chief financial officer.

Analysts have been critical of profit margins falling below 6% and below those of the resurgent Mercedes. BMW now targets 8-10% within five years.

On product, BMW has canned the so-called Space Functional Vehicle which was thought to be a design cul-de-sac for BMW which must always emphasise performance rather than utility. Instead there is to be a “Progressive Activity Sedan” for which little has been defined, and another tour-de-force – a Grand Touring version of the 6-Series coupe based on the CS shown in Shanghai.

There will also be a small Sports Activity Vehicle from BMW called the X1, and a second SAV from Mini as the next derivative after a convertible based on new-shape Mini.

Rolls will make a coupe version of the Phantom and in due course, a smaller car.

So fast will be the spending on new models that BMW does not believe it can cut its way to better profit by reducing the workforce. Instead it will look for savings in purchasing and sell more cars.

Capacity is being lifted substantially in the US at Spartanburg, in China, and at the Mini plant in Oxford from 240,000 to 260,000 a year.

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