Variety may be the spice of life, but not when the bottom line has to be considered. The days of a multitude of body-style variations spawning from a model type as well as an assortment of engine options may be over as automakers concentrate their resources in the transition to electrification.
Like other automakers (such as Volkswagen and Renault) making that journey, BMW says it will have to simplify its vehicle portfolio as it targets to increase its operating margin, Reuters reports. According to its finance officer Nicolas Peter, the move from internal combustion engine to electric vehicle line-ups will see heavy investment from Munich.
However, because EVs are expensive to develop and only account for a small portion of sales at present, they are less profitable for the automaker, something that will need a rethink in how the best returns can be obtained, he explained. “That’s why investment is so important. We have to find ways to get to a different cost level, especially with cells and batteries,” he said.
Another means to cut costs, he said, is by reducing complexity. The automaker is embarking on a push to reduce engine variants and options for different vehicles, scrapping little-used features and overhauling software to focus on a simpler, more efficient way of building vehicles.
The company will also delve deeper into aspects of digitalisation. He said that in polls, two thirds of Chinese consumers have said they will switch to other brands and products if these provide a better digital experience, and so this was among the themes that are in focus at the automaker.
He added that while further consolidation in the industry is expected as automakers struggle with the huge investments needed for electrification as well as self-driving technology, BMW will be able to handle the switch without any external assistance. “We are very confident we can make it alone,” he said.
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