Automaker will offer fewer variants and equipment options
BMW will discontinue the manual transmission option on the 2 Series coupe in the U.S. to cut costs. According to a report from Reuters, the move will help cut certification costs in the U.S. market. In addition, BMW finance chief Nicolas Peter stated that BMW will streamline its manufacturing processes by offering fewer variants of its future vehicles to offset high development costs.
In addition to the discontinuation of the manual-equipped 2 Series in the U.S., BMW has also stopped offering a manual on the 5 Series, including entry-level diesel variants in other markets. Peter also hinted that the next generation of its midsize luxury car will likely have less diesel-powered variants. As BMW offers many variants and equipment options, there’s plenty of fat that can be cut.
BMW Group is currently in the midst of developing its EV, autonomous, and connected vehicle technologies alongside tradition cars with combustion engines to meet emissions tests that are constantly getting more stringent. Part of the increase in costs has to do with China pushing to meet its electric vehicle quota aggressively, which made European automakers accelerate electric and hybrid vehicle development. Reuters reports that in 2016 BMW spent 5.5 percent of its revenue on research and development. Peter also revealed that in the next three years, BMW will continue to spend between 5.5-6 percent of its revenue in developing eco-friendly vehicles and autonomous driving tech. However, the production site of an all-electric Mini hasn’t yet been decided but the Oxford facility is one of the contenders, with a final decision to be announced this year.
BMW’s sales, pre-tax profit, and earnings before interest and tax (EBIT) has increased this year by around 8-10 percent. Much of that boost is due to the recently launched 5 Series, which has done well in sales. Double-digit growth in the Chinese market is still on track and with the launch of the X1 and 5 Series long wheelbase, it will continue to see more gains in the market. Europe has also seen some growth but the demand in the U.K. is slowing down. The U.S. market will likely remain stable or shrink a little, Peter told Reuters. He also revealed that the automaker is in the process of cutting down vehicle inventory in the U.S.