In light of cooling global economy and persistent trade tensions across various countries, BMW AG has decided to weed out its model lineup to reduce operating costs.
“The challenges facing the entire sector are unlikely to diminish in the coming months,” Chief Executive Officer Harald Krueger said Friday in a statement presenting preliminary results. “Great efforts will, therefore, be needed across the entire group to help shape the sector’s transformation under such conditions.”
The 3-Series Gran Turismo will be discontinued inspite of good sales.
Reports suggest that the company will also undergo a restructuring of its management board, consolidating sales of BMW, Mini and Rolls Royce under a central position led by Pieter Nota, the person responsible for BMW brand sales so far. In addition to this, Peter Schwarzenbauer who led Rolls-Royce and Mini cars along with digital businesses at BMW will retire this year as he turns 60.
The company has been facing immense pressure from tariffs on vehicles made at its plant in Spartanburg, South Carolina and sent to China along with severe price competition in Europe. Auto manufacturers around the world reduced their production targets for 2019 in light of new and stringent emission norms. The German manufacturer’s returns on sales from its automotive division dipped to 7.2 per cent in 2017, below a historical 8 per cent to 10 per cent range.
The company confirmed plans of discontinuing the 3-Series Gran Turismo, even though the model is selling well. Alongside the 3-Series Gran Turismo. Apart from plans of discontinuing other derivative models to reduce complexity, BMW also cut its proposed dividend by 50 cents to 3.5 euros ($3.97) per common share.
Major markets including China and Europe have shown further deterioration since the second half of last year. In January BMW predicted a rise in deliveries this year, though sales dropped two per cent through February as the European market declined for a sixth straight month. The company will present full earnings on March 20, including its outlook for the current year.