RE: BMW Facing 'Worst Crisis in its History'
Friday 28th November 2008
BMW had enjoyed bumper sales recentlyBMW is facing the ‘biggest crisis in its history’, according to the company’s chairman. The manufacturer is understood to be laying off 8,000 workers worldwide in a bid to cut costs. All automakers have been hit by the sudden global economic downturn including BMW, VW and Porsche.
BMW Facing 'Worst Crisis in its History'
Germany's carmakers admit they are facing hard times...
BMW had enjoyed bumper sales recently
The ‘c’ word seems to be on everyone’s lips at the moment as they struggle to rescue sales. Daimler boss Dieter Zetsche admitted the situation could easily be the ‘worst crisis since World War II’ and VW chairman Martin Winterkorn said the company had ‘never before seen this kind of crisis’. He added that it was now impossible for his company to avoid ‘difficult cuts’ and ‘painful’ measures.
The New York Times reports that cars from BMW and Mercedes were starting to gather dust at US ports, while thousands of Toyota and Nissan models are said to be piling up in Long Beach, California. BMW CEO Norbert Reithofer told Germany’s Spiegel that following fantastic sales in the last decade the manufacturer is now in the ‘biggest crisis in its history’. Looks like the British car industry got out just in time…
Discussion
I would have thought BMW would have been hit harder than most companies. The base spec 3 series infront of the massively overpriced Barratt home has been a symbol of the last 8 or so years. People buying into aspirational brands with money they don't really have. Now that the hard times have come home I imagine people who previously would have been looking at what sort of finance deal they could get on the 318 with cloth seats will be settling for a Focus. Obviously the whole car industry is in trouble at the minute, but BMW's position I would have guessed would have been more vulnerable than most.
As I said in another similar thread, all these huge car manufacturers only have themselves to blaim. They flooded the market so many variants that is was obvious to see that when times were hard it was going to hit them hard.
It's the fact that they made this mess themseleves that they should be the ones to get themselves out of it, without a penny from any tax payer from any country in this world.
Funny old world, when they are making money they do everything they can to pay as little corporation tax as possible. Now they are in the big trouble they are rolling out all the sob stories to get our help.
My heart bleeds for them.
One way they can help us is to provide us with cars we can afford in the first place!
It's the fact that they made this mess themseleves that they should be the ones to get themselves out of it, without a penny from any tax payer from any country in this world.
Funny old world, when they are making money they do everything they can to pay as little corporation tax as possible. Now they are in the big trouble they are rolling out all the sob stories to get our help.
My heart bleeds for them.
One way they can help us is to provide us with cars we can afford in the first place!
BMW about to make significant cutbacks, VW to follow..
Jaguar, Landrover on short time, Aston Martin are on a 3 day week, and with stockpiles of cars which we can all get with a 25% discount if you wanted one.., Honda in Swindon are on a 6 week shutdown over Xmas, ahead of winding down the plant, BMW Mini, the most profitable line, is shutting over Xmas for 4 weeks.. Bentley in Crewe are on a 3 day week.. Ford, Chrysler and GM going cap in hand to the Fed for a cheeky $25 billion to be going on with..
It was amusing when the Fed represntative asked the CEO's of the big 3 who was going to sell their coorporate jet to shore up their balance sheet and get a scheduled flight home tho'...naturally no hands went up.. so they threw the proposal out for a rethink..;)
Across the board then, we would have to conclude that its all turning brown and smelly..
But on the upshot.. fuel is down 20% and what a fantastic time to get a deal on that car youve always wanted..!
Jaguar, Landrover on short time, Aston Martin are on a 3 day week, and with stockpiles of cars which we can all get with a 25% discount if you wanted one.., Honda in Swindon are on a 6 week shutdown over Xmas, ahead of winding down the plant, BMW Mini, the most profitable line, is shutting over Xmas for 4 weeks.. Bentley in Crewe are on a 3 day week.. Ford, Chrysler and GM going cap in hand to the Fed for a cheeky $25 billion to be going on with..
It was amusing when the Fed represntative asked the CEO's of the big 3 who was going to sell their coorporate jet to shore up their balance sheet and get a scheduled flight home tho'...naturally no hands went up.. so they threw the proposal out for a rethink..;)
Across the board then, we would have to conclude that its all turning brown and smelly..
But on the upshot.. fuel is down 20% and what a fantastic time to get a deal on that car youve always wanted..!
I dont understand. These car companies have been making record profits these past few decades so where has all that money gone? yes in R&D but surely they should have millions if not billions in reserve and other areas of finance.The recession hasnt even fully started yet and theyre already crying. Cutting jobs is the last things they need to do as it dramatically decreases the overall health of the worlds economy. If everybody just kept all their employees the economy will recover far far far quicker. Thats what happened in the 1930s.. more people got laid off meaning less people had disposable income thus less products were sold thus more people had to be laid off... its just going to spiral like that.
The reality here is that all of them (Porsche especially) have been enjoying some very lucrative years funded by money that nobody really had, as they are now paying for it. So it should come as no surprise that spending £30k on a 2 litre 4 door saloon is going to be a struggle for some now.
The BMW boom lasted almost 60 years though.... An excerpt from BMW history:
"Losses were apparent in 1958 and by 1959 crisis point was reached.
A general meeting in November 1960 saw BMW pointed along its present success route, initially guided by Dr Johannes Semler. He had the confidence of increased capital and an extremely warm reception for the rear engine 700, which had debuted in 1959 and went on to sell over 181,000 derivatives in saloon and successful sporting coupe styles. It was also the 700 that got BMW a reputation for agile sporting success in the sixties".
"Losses were apparent in 1958 and by 1959 crisis point was reached.
A general meeting in November 1960 saw BMW pointed along its present success route, initially guided by Dr Johannes Semler. He had the confidence of increased capital and an extremely warm reception for the rear engine 700, which had debuted in 1959 and went on to sell over 181,000 derivatives in saloon and successful sporting coupe styles. It was also the 700 that got BMW a reputation for agile sporting success in the sixties".
Edited by PPPPPP on Friday 28th November 15:00
Streetrod said:
Porsche might be one of the companies best placed to come out this whole mess because they actualy make more money from their finanacial dealings than they do from selling car's, four times as much in fact. That is why they are the worlds most profitable car company
How are their fanancial dealing doing now, though?If they were in to trading staocks and shares they could have cought a cold on that front too!
The level of opinionated nonsense posted here is unbeliveable. Especially people who quite clearly know absolutely nothing about running a business.
Firstly, believe me when I say I'm no huge fan of BMW. But can you please spare a thought for the thousands of people who are losing their jobs in the Automotive industry at the moment. And before you jump in, yes there are thousands more losing their jobs in other industries too - that is not my point.
Now just to fill some of you in, the automotive industry is one of the fastest moving, most heavily legislated and most competitive markets in the world. And please bear in mind I said "one of" so please don't start naming others. Automotive companies make hugely complex products with cutting edge technologies made from tens of thousands of unique components at prices which are affordable for the vast majority of people. One point worth mentioning is to post that cars companies need to make affordable products on a story about a premium product manufacturer is clearly nonsense. If you can not afford a BMW, buy a Ford. Or there are hundreds of choices in between.
To answer another point, can anyone actually quote the D&D and Tooling costs associated with developing a new car from scratch (and I mean from scratch including factory set-up, etc, etc). The costs run into billions of dollars (which is why many companies now commonise as much as possible). Car companies balance this cost with the sale price of the car to ensure future new models can be funded and still make enough profit to satisfy shareholders. Also bear in mind development cycles for new cars are circa 3-4 years depending on the size of the project. You can now see that sudden swings in the sales volume of your current product make it very difficult to maintain funding of the current product cycle - the only way to react quickly is to cut heads - tools are already paid for, and D&D contracts are often agreed up front. Therefore peoples jobs must go.
Also bear in mind that the amount of D&D that can be spent on future product development is a fixed proportion of the total sales value. Lower sales means developments has to be reduced. This means less choice and slower technology progression. So saying things like "well the car industry will just have to make better cars so people will buy them" is difficult to put into reality. The current recession means future progression of CO2 technology will slow dramatically and choice will reduce as D&D funding is reduced in line with lower sales. Whether you like the multitude of different models on sale at the moment is irrelevant - at least you have more choice now than you ever have in the past.
Finally bear in mind that if some of the big car companies do go under, as could well be the case over the next couple of years, millions (estimated 2 million for GM) of jobs will be lost. Not just in the Automotive industry but in a huge range of industries including the post offices and coffee shops that support the factories and communities built around the industry. The cost of the remaining manfacturers cars would then have to increase as their suppliers seek to put their prices up to compensate for their lost volumes in order to keep their own businesses afloat. It has been predicted that this could cause a chain reaction pulling other companies down in turn as their products become uncompetitive to manufacture. Also the loss of so many jobs in one go would have a marked effect of the economies of effected countries, pulling them further into recession.
I can't be bothered writing any more, most people on here will only pull it apart anyway.
Firstly, believe me when I say I'm no huge fan of BMW. But can you please spare a thought for the thousands of people who are losing their jobs in the Automotive industry at the moment. And before you jump in, yes there are thousands more losing their jobs in other industries too - that is not my point.
Now just to fill some of you in, the automotive industry is one of the fastest moving, most heavily legislated and most competitive markets in the world. And please bear in mind I said "one of" so please don't start naming others. Automotive companies make hugely complex products with cutting edge technologies made from tens of thousands of unique components at prices which are affordable for the vast majority of people. One point worth mentioning is to post that cars companies need to make affordable products on a story about a premium product manufacturer is clearly nonsense. If you can not afford a BMW, buy a Ford. Or there are hundreds of choices in between.
To answer another point, can anyone actually quote the D&D and Tooling costs associated with developing a new car from scratch (and I mean from scratch including factory set-up, etc, etc). The costs run into billions of dollars (which is why many companies now commonise as much as possible). Car companies balance this cost with the sale price of the car to ensure future new models can be funded and still make enough profit to satisfy shareholders. Also bear in mind development cycles for new cars are circa 3-4 years depending on the size of the project. You can now see that sudden swings in the sales volume of your current product make it very difficult to maintain funding of the current product cycle - the only way to react quickly is to cut heads - tools are already paid for, and D&D contracts are often agreed up front. Therefore peoples jobs must go.
Also bear in mind that the amount of D&D that can be spent on future product development is a fixed proportion of the total sales value. Lower sales means developments has to be reduced. This means less choice and slower technology progression. So saying things like "well the car industry will just have to make better cars so people will buy them" is difficult to put into reality. The current recession means future progression of CO2 technology will slow dramatically and choice will reduce as D&D funding is reduced in line with lower sales. Whether you like the multitude of different models on sale at the moment is irrelevant - at least you have more choice now than you ever have in the past.
Finally bear in mind that if some of the big car companies do go under, as could well be the case over the next couple of years, millions (estimated 2 million for GM) of jobs will be lost. Not just in the Automotive industry but in a huge range of industries including the post offices and coffee shops that support the factories and communities built around the industry. The cost of the remaining manfacturers cars would then have to increase as their suppliers seek to put their prices up to compensate for their lost volumes in order to keep their own businesses afloat. It has been predicted that this could cause a chain reaction pulling other companies down in turn as their products become uncompetitive to manufacture. Also the loss of so many jobs in one go would have a marked effect of the economies of effected countries, pulling them further into recession.
I can't be bothered writing any more, most people on here will only pull it apart anyway.
Edited by DeBruce on Friday 28th November 15:24
BMW had enjoyed bumper sales recently
And with bumpers the size of those they were probably high value too.
The trouble is, an X6 or similar is always going to be a "statement" vehicle which people might buy in the good times (although I personally can't think why). In harder times a car which has a more specific and practical purpose, and carries out that purpose more efficiently is bound to be the one people buy.
Edited by andyps on Friday 28th November 15:31
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