Published on March 23rd, 2019 | by Daniel Sherman Fernandez0
BMW To Retire The 3-Series GT
BMW said it will step up cost cutting in anticipation of a difficult year after the automaker reported a 7.9% fall in 2018 operating profit due to higher investments in new generation electric cars and the ongoing currency issues. BMW said it will not build a successor to the 3-series Gran Turismo “despite a good level of demand.”
More derivative versions will also be cut citing concerns for the 5-Series GT and the recently launched 6-Series GT. The company said it will also step up other measures to reduce complexity, without specifying them.
Press Release Here: In the course of a challenging financial year 2018, the BMW Group made important strategic decisions set to secure its long-term success. As part of the company’s Strategy NUMBER ONE > NEXT, the green light was given to launch a new product offensive in the upper luxury class and the cornerstone was laid for additional expansion of the company’s presence in China, the world’s largest automobile market.
With the BMW Vision iNEXT, the Group also presented its new technology flagship, which integrates the key future-oriented topics of autonomous driving, connectivity, electrification and services (ACES). The BMW Group continues to systematically broaden its range of electrified models and is increasingly focusing on co-operations in the fields of mobility services and autonomous driving. At the same time, especially during the second half of the year, business performance was impacted by significant challenges relevant to the entire sector, and which are expected to accompany the BMW Group beyond 2018.
“2018 was a challenging year for theautomotive sector as a whole. Nevertheless, we achieved the second-highestGroup profit to date,” said Harald Krüger, Chairman of the Board ofManagement of BMW AG, in Munich on Friday. “The challenges facing the entiresector are unlikely to diminish in the coming months. Great efforts willtherefore be needed across the entire Group to help shape the sector’stransformation under such conditions.”
Alongside the challenges facing the entireindustry over the past year, from the BMW Group’s perspective, ongoinginternational trade conflicts also contributed to a tightening market situationand greater uncertainty. Moreover, the shift to the new WLTP test cycle causedsignificant supply distortions on several European markets, leading tounexpectedly intense competition. In the third quarter of the financial year2018, increased statutory and non-statutory warranty measures resulted insignificantly higher additions to provisions in the Automotive segment.
“We expect strong headwinds tocontinue to effect the entire sector in 2019. However, we are tackling thesevarious challenges systematically, in order to emerge from them even strongerthan before,” stated Nicolas Peter, Member of the Board of Management of BMWAG, Finance. “This is why we launched our Performance > NEXT programmeback in 2017 with the aim of optimising performance, improving structuralefficiency and reducing complexity wherever possible. In view of currentdevelopments, we intend to further broaden and significantly intensify theseefforts.”
The BMW Group currently sees challenges invarious areas, including political uncertainty, a cooling global economy(partly due to international trade conflicts), rising production costs to meetregulatory requirements, exchange rate effects and rising raw materials prices.To counteract these negative factors, measures already in place to reduceproduct portfolio complexity are being expanded and also applied to modelderivatives. For example, despite a good level of demand, no successor modelwill be developed for the current generation of the BMW 3-Series Gran Turismo.
Highupfront expenditures in a volatile environment
Despite the demanding conditions, the BMWGroup continues to invest substantial amounts in the mobility of the future. At€ 5,029 million, capital expenditure in 2018 was 7.3% above the previous year’shigh level (€ 4,688 million). The Capex ratio rose to 5.2% (2017: 4.8%).Investments included work connected with the introduction of new models in theSpartanburg, Dingolfing and Munich plants and building of the Group’s plant inMexico.
As planned, research and developmentexpenses in 2018 were significantly higher than in the previous year andtotalled € 6,890 million (2017: € 6,108 million; +12.8%). R&D expenditurefor the year was therefore equivalent to 7.1% of Group revenues (2017: 6.2%).In addition to ramping up the roll-out of new models, the focus is also onfuture-oriented topics such as autonomous driving and the systematic expansionof electric mobility.
Cooperationfor next generation of autonomous driving
The BMW Group believes long-termpartnerships within a flexible, scalable, non-exclusive platform are key to advancingthe industrialisation of autonomous driving. As early as 2016, the BMW Groupestablished a non-exclusive platform with technology specialists, suppliers andOEMs to take the technology to series maturity and has now successfullyconsolidated work in this area at the Autonomous Driving Campus inUnterschleißheim, near Munich.
The generation of technologies currentlyunder development will go into series production as Level 3 automation in theBMW iNEXT in 2021, this vehicle will also be Level 4-enabled for pilotprojects.
The BMW Group has joined forces withDaimler AG to advance the development of the next generation of technologiesneeded for autonomous driving. At the end of February, the two companies signeda Memorandum of Understanding (MoU) to jointly develop the technologies thatare vital for future mobility.
Initially, the focus will be on advancingthe development of next-generation technologies for driver assistance systems,automated driving on highways and parking features (in each case up to SAELevel 4).
The BMW Group and Daimler AG view theirpartnership as a long-term, strategic cooperation and aim to make next-leveltechnologies widely available by the middle of the coming decade. Combining theoutstanding expertise of the two companies will boost their joint innovativestrength.
Moreover, it will both accelerate andstreamline the development of future technology generations. The development ofcurrent-generation technologies and the ongoing collaborations both companieshave in this field will remain unaffected and continue as planned. Both partieswill also explore additional partnerships with other technology companies andautomotive manufacturers that could contribute to the success of the platform.
Majorinvestments in joint venture for mobility services
The BMW Group and Daimler AG are alsoworking together in the field of mobility services, creating a new globalplayer that provides sustainable urban mobility for its customers. The twocompanies are investing more than one billion euros to develop and more closelyintermesh their offerings for car-sharing, ride-hailing, parking, charging andmultimodal transport. The cooperation comprises five joint ventures: REACH NOW(multimodal), CHARGE NOW (charging), FREE NOW (ride-hailing), PARK NOW(parking) and SHARE NOW (car-sharing).
The common vision is clear: the fiveservices will increasingly merge to form a single mobility service portfoliowith an all-electric, self-driving fleet of vehicles that charge and parkautonomously and also interconnect with other modes of transport. This serviceportfolio will be a key cornerstone in the BMW Group’s strategy as a mobilityprovider going forward. The cooperation represents the ideal approach formaximising opportunities in a growing market, while jointly shouldering theunavoidable cost of investment.
“With our Strategy NUMBER ONE >NEXT, we are making consistent advances in the various ACES fields and bringingthe mobility of the future onto the roads. Our path is clear: in areas with ahigh degree of differentiation potential, such as electric drivetrains, we willrely entirely on our own excellent development expertise; where highscalability is more important than exclusivity, we will seek to cooperate withdependable partners,” said Krüger.