German auto giant BMW wants to become a bigger giant, as it looks to expand its annual production volume from 1.5-million vehicles/year to 2-million vehicles by 2020.
Herbert Diess, BMW's board member in charge of purchasing said in a recent interview that this expansion will come by the way of reducing purchasing costs, while keeping a keen eye on quality. BMW has already cut its annual parts purchasing costs by $5.5-billion, but thanks to good quality parts, their warranty costs have also decreased. Currently, BMW spends $37-billion on parts purchasing alone. Diess says this number will grow with the increase in production numbers.
Diess also said that the type of purchasing will also change. Engines with fewer cylinders are becoming more popular and the electrification of the auto industry is only going to grow over the coming years. To prepare itself for this change, BMW is starting their own sub-brand called "i" which will cater to electric and hybrid vehicles.
The industry is also changing its preferences in materials. Instead of steel, more and more parts are being made from lighter aluminum, and soon carbon-fiber will become available on normal cars, not just high-end exotics.
In order to move forward with its plan, China is an important factor, as 75% of the foreign purchasing BMW does is with the Chinese. America is another benefactor, as the new X3 will also be produced in Spartanburg, South Carolina.
More: BMW Targets 25% Sales Growth by 2020, 2 Million Vehicles Annually