BMW is confident that sales in China will increase next year, finance chief Nicolas Peter told Reuters on Monday, attributing high demand for premium cars to travel restrictions that have left consumers with more money to spend.
Car sales in China have fallen in recent months as floods, COVID-19 outbreaks and a semiconductor shortage hit the domestic market, but BMW has bucked the trend, reporting a 12% rise in sales there in its second-quarter.
"The market will not grow as quickly as it did over the last 12 months - that was when the catch-up effects after the corona disruption made themselves felt," Peter said. "But we do expect it to grow."
BMW was also profiting from travel restrictions that have left more money in people's pockets in China for discretionary spending, he said on the sidelines of Munich IAA auto show, the first such industry event since before the pandemic.
STOCKED ON BATTERIES
Peter said BMW had struck enough contracts for the raw materials needed to produce batteries for two to three years via its third-party suppliers, even as carmakers face shortages across supply chains of everything from lithium to chips.
Still, BMW has no plans to invest in battery production of its own as rivals such as Volkswagen or Daimler are doing as it is too early to know which battery technology will prevail in the future, Peter said.
The Munich-based automaker is also investing heavily in its recycling capabilities, he said, a move that ticked the boxes both of its sustainability goals, and cost cutting.
Chief Executive Oliver Zipse said last week that BMW would cut carbon emissions across the life cycle of its vehicles - including production - by at least 40% from 2019 levels through 2030, up from a previous target of a third.
"If we manage to reduce our need for raw materials through recycling, we save money," Peter said.
On software, however, BMW's finance chief urged collaboration between carmakers to build operating systems that could be implemented across brands, drawing a comparison between cars and smartphone technology.
"It's not so black and white, because there are functions in a car which are proprietary to a manufacturer," he said. "But it would be no bad thing for the industry, if we worked together more closely," Peter told Reuters.
In order to achieve this, the Munich-based automaker intends to increase the proportion of recycled and reusable materials used in manufacturing its vehicles from 30% to 50%, it said in a statement released ahead of the IAA Mobility conference in Munich next week.
Forced to shut down plants last year, carmakers now face increasing competition from the consumer electronics industry for chip deliveries. That problem has been compounded by a series of supply chain disruptions during the pandemic.
Copyright©2023 Living Media India Limited. For reprint rights: Syndications Today