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| BMW's Tailpipe Troubles |
| CEO cites emissions, trade issues at hand |
AutoWeek | Published 03/19/07, 1:09 pm et |
BMW faces difficult and profit-eroding issues, such as the weak dollar and yen, rising material prices and tougher European Union regulations on tailpipe emissions. Also, rivals Audi and Lexus have expansion plans that could hurt BMW sales.
BMW CEO Norbert Reithofer talked about how BMW will meet these challenges with Automobilwoche Editor Guido Reinking and Staff Reporter Pia Krix. Reithofer, 50, succeeded Helmut Panke as CEO in September.
BMW is still far below the European auto industry's goal of reducing CO2 emissions to 140 grams per kilometer driven by next year. How do you plan to close that gap?
We will achieve a clear reduction in these numbers by the target date. By then a third of our vehicle fleet will be under 140 grams per kilometer. But we have to reach this goal without undermining our core characteristic: driving dynamics.
The European Commission wants to reduce CO2 emissions from cars to 120 grams per kilometer by 2010. What would that mean?
There isn't a single luxury manufacturer who could achieve this limit for all vehicles. It would put the foundation of the German luxury automakers' existence into question.
You have other challenges, such as rising prices for raw materials and exchange-rate exposure. Analysts put these effects at more than a billion euros a year.
We were in a position to compensate for these figures. We did this through increases in productivity as well as through our growth in volume and model-mix improvements. This year, there is no question that we will increase our productivity further, by at least 5 percent.
How bad are exchange-rate effects?
It's not just the weak dollar that's an issue for us. The yen also has become an issue. We have been very successful in the Japanese market, so the yen exchange rate keeps playing a larger role for us.
How great is Lexus' competitive advantage in Europe by virtue of its production in Japan?
The competitive advantage is now significant. Since 2001, the yen has continued to weaken against the euro.
Your rival Audi has resolved to become the most successful luxury automaker in the world by 2015.
We have been in competition with Mercedes in sporty vehicles for the past 10 years. It has done both of us good; it has pushed both of us. I view the prospects of more competition from Audi in precisely the same way.
Do you see any danger that you could be overtaken by Audi?
If you look at the entire world - not just Europe, Asia and the U.S. - then you see that there are just two luxury manufacturers acting globally: Mercedes and BMW.
BMW CEO Norbert Reithofer talked about how BMW will meet these challenges with Automobilwoche Editor Guido Reinking and Staff Reporter Pia Krix. Reithofer, 50, succeeded Helmut Panke as CEO in September.
BMW is still far below the European auto industry's goal of reducing CO2 emissions to 140 grams per kilometer driven by next year. How do you plan to close that gap?
We will achieve a clear reduction in these numbers by the target date. By then a third of our vehicle fleet will be under 140 grams per kilometer. But we have to reach this goal without undermining our core characteristic: driving dynamics.
The European Commission wants to reduce CO2 emissions from cars to 120 grams per kilometer by 2010. What would that mean?
There isn't a single luxury manufacturer who could achieve this limit for all vehicles. It would put the foundation of the German luxury automakers' existence into question.
You have other challenges, such as rising prices for raw materials and exchange-rate exposure. Analysts put these effects at more than a billion euros a year.
We were in a position to compensate for these figures. We did this through increases in productivity as well as through our growth in volume and model-mix improvements. This year, there is no question that we will increase our productivity further, by at least 5 percent.
How bad are exchange-rate effects?
It's not just the weak dollar that's an issue for us. The yen also has become an issue. We have been very successful in the Japanese market, so the yen exchange rate keeps playing a larger role for us.
How great is Lexus' competitive advantage in Europe by virtue of its production in Japan?
The competitive advantage is now significant. Since 2001, the yen has continued to weaken against the euro.
Your rival Audi has resolved to become the most successful luxury automaker in the world by 2015.
We have been in competition with Mercedes in sporty vehicles for the past 10 years. It has done both of us good; it has pushed both of us. I view the prospects of more competition from Audi in precisely the same way.
Do you see any danger that you could be overtaken by Audi?
If you look at the entire world - not just Europe, Asia and the U.S. - then you see that there are just two luxury manufacturers acting globally: Mercedes and BMW.
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