Here are excerpts from his speech today:
- reveals acquisition plans
- New X1 confirmed
- New "Gran Torismo" CS concept (4 door 6er / 8 series to compete with MB CLS and Porsche Panamera)
- No "Space Functional Concept" (Minivan)
- Instead, new "Progressive Activity Sedan" - PAS
[SIZE=-1]Norbert Reithofer [/SIZE]
Chairman of the Board of Management of BMW AG
Press Conference on the Strategic Realignment of the BMW Group
27 September 2007, 3:00 pm
Ladies and Gentlemen,
I, too, would like to express my sincere thanks for your attending this press conference!
The BMW Group is about to implement a fundamental strategic realignment.
I know that many of you believe this will primarily involve one of the three following options:
First: a major acquisition or merger.
Second: a restructuring along with mass layoffs.
Or third: a brand-new business model.
Our definition of strategy is a long-term and target-oriented approach. Forward-looking action on the basis of comprehensive analyses is what has enabled this company to prosper for over 90 years now.
We as the BMW Group will continue to chart our own course.
...
Our strategy will lead the BMW Group through some fundamental changes.
1. We will consistently align the BMW Group to achieve profitability and increase value over the long term.
2. We will create the basis for ensuring the Group's long-term growth.
3. We will share the company's success with our shareholders to a greater extent.
4. We will start a program to tap into efficiency potential amounting to billions.
5. We will engineer new technologies in the field of mobility within the scope of an innovation initiative.
6. We will focus even more on our customers. They will be the benchmark for all our activities.
All of this will ensure the company's success and safeguard the Group's independence.
...
But, would the BMW Group have remained so successful if the company had not changed course? Would we have been able to increase our company's value over the long term?
We clearly realized: Yesterday's formula for success will not work in the future.
...
We will significantly improve our profitability and capital efficiency.
To this end, we will focus the entire organization more strongly on the return on capital. We will reduce capital expenditure per vehicle.
As far as retail volume is concerned, we intend not only to remain the world's leading premium provider in the automotive industry. By 2020, we want to lead all of the segments in which we are active.
What this means is that we intend to increase our automobile retail to more than two million units by 2020. This includes completely new vehicle concepts for individual mobility.
...
We will continue to step up natural hedging and global sourcing:
We took a look at the competitive environment to determine whether we can generate added growth by purchasing a fourth brand. Such a brand would have had to meet the following criteria:
1. An additional automotive brand would have to be a perfect fit for us and our strengths.
2. Rising unit figures would have to result in a decline in unit costs and thus lead to economies of scale.
3. The new brand would have to at least make the same contribution to earnings as our existing automobile business.
None of the automotive brands we evaluated meets our requirements at present.
In the meantime, we took action in the Motorcycles segment during the strategic review and acquired the Husqvarna brand which has a rich tradition. Its sporty profile will enable us to attract younger target groups even more rapidly.
In principle, we will keep acquisitions on our agenda. We defined clear criteria for potential acquisitions within the scope of our strategic review. This will allow us to act swiftly whenever necessary.
The premium business remains our strength – not the near-premium business, nor the mass market segment.
...
Here is an outlook until 2012:
...
The BMW Group will invest substantially in future technologies with a view to developing entirely new mobility solutions. This applies to design, concept and drive systems.
....
Ladies and Gentlemen,
The BMW Group is at the beginning of a new era.
- reveals acquisition plans
- New X1 confirmed
- New "Gran Torismo" CS concept (4 door 6er / 8 series to compete with MB CLS and Porsche Panamera)
- No "Space Functional Concept" (Minivan)
- Instead, new "Progressive Activity Sedan" - PAS
[SIZE=-1]Norbert Reithofer [/SIZE]
Chairman of the Board of Management of BMW AG
Press Conference on the Strategic Realignment of the BMW Group
27 September 2007, 3:00 pm
Ladies and Gentlemen,
I, too, would like to express my sincere thanks for your attending this press conference!
The BMW Group is about to implement a fundamental strategic realignment.
I know that many of you believe this will primarily involve one of the three following options:
First: a major acquisition or merger.
Second: a restructuring along with mass layoffs.
Or third: a brand-new business model.
Our definition of strategy is a long-term and target-oriented approach. Forward-looking action on the basis of comprehensive analyses is what has enabled this company to prosper for over 90 years now.
We as the BMW Group will continue to chart our own course.
...
Our strategy will lead the BMW Group through some fundamental changes.
1. We will consistently align the BMW Group to achieve profitability and increase value over the long term.
2. We will create the basis for ensuring the Group's long-term growth.
3. We will share the company's success with our shareholders to a greater extent.
4. We will start a program to tap into efficiency potential amounting to billions.
5. We will engineer new technologies in the field of mobility within the scope of an innovation initiative.
6. We will focus even more on our customers. They will be the benchmark for all our activities.
All of this will ensure the company's success and safeguard the Group's independence.
...
But, would the BMW Group have remained so successful if the company had not changed course? Would we have been able to increase our company's value over the long term?
- While retail and revenues have risen steadily in recent years, our profit has displayed disproportionally low development.
- Our key performance indicators have worsened.
We clearly realized: Yesterday's formula for success will not work in the future.
...
We will significantly improve our profitability and capital efficiency.
To this end, we will focus the entire organization more strongly on the return on capital. We will reduce capital expenditure per vehicle.
- Our future key performance indicator for our automotive business is the Return on Capital Employed. We intend to achieve a RoCE of 26 percent in the Automobile segment by 2012.
- This results for the EBIT-based return on sales of 8 to 10 percent in the Automobile segment.
- We aim to increase our automobile retail to 1.8 million units.
- We will increase our motorcycle retail by 50 percent to 150,000 units per year.
As far as retail volume is concerned, we intend not only to remain the world's leading premium provider in the automotive industry. By 2020, we want to lead all of the segments in which we are active.
What this means is that we intend to increase our automobile retail to more than two million units by 2020. This includes completely new vehicle concepts for individual mobility.
...
We will continue to step up natural hedging and global sourcing:
- We will increase the production capacity of our US plant in Spartanburg to 240,000 units. Plans for the expansion are already underway.
- We will also strategically increase purchasing in US dollars.
- We will raise the Oxford MINI plant's capacity to 260,000 units per annum – without making additional structural investments.
- We will take the first step to increasing our capacity in China from 30,000 to 44,000 units a year.
We took a look at the competitive environment to determine whether we can generate added growth by purchasing a fourth brand. Such a brand would have had to meet the following criteria:
1. An additional automotive brand would have to be a perfect fit for us and our strengths.
2. Rising unit figures would have to result in a decline in unit costs and thus lead to economies of scale.
3. The new brand would have to at least make the same contribution to earnings as our existing automobile business.
None of the automotive brands we evaluated meets our requirements at present.
In the meantime, we took action in the Motorcycles segment during the strategic review and acquired the Husqvarna brand which has a rich tradition. Its sporty profile will enable us to attract younger target groups even more rapidly.
In principle, we will keep acquisitions on our agenda. We defined clear criteria for potential acquisitions within the scope of our strategic review. This will allow us to act swiftly whenever necessary.
The premium business remains our strength – not the near-premium business, nor the mass market segment.
...
Here is an outlook until 2012:
- We would like to confirm the announcement of the BMW X1. This model is going to complement the successful X family, together with the BMW Concept X6 presented at the Frankfurt Motor Show.
- Furthermore, we decided to manufacture a four-dour Gran Turismo based on the CS concept study showcased in Shanghai.
- Another result of our strategy is that we will not build a space-functional concept. It will be replaced by a fundamentally altered concept. What I am talking about here is a new segment. We currently call the concept Progressive Activity Sedan or PAS in short. Expect this concept to introduce its own interpretation of the sedan and to surprise you with intelligent features.
- As far as Rolls-Royce is concerned, we would like to confirm our plans for the third variant of the Phantom: a coupe. Moreover, we reevaluated and confirmed an additional Rolls-Royce model during our strategic review. It will slot in below the Rolls-Royce Phantom in terms of both size and price.
- At MINI, we opted for a further model in the sports activity vehicle segment.
- We will continue to extend the range of products under our BMW Motorrad and Husqvarna Motorcycles brands in the years ahead.
...
The BMW Group will invest substantially in future technologies with a view to developing entirely new mobility solutions. This applies to design, concept and drive systems.
....
Ladies and Gentlemen,
The BMW Group is at the beginning of a new era.