ots Ad hoc-Service: BMW AG
BMW Group Resolves Reorientation (Part 1 of 2)
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Munich (ots Ad hoc-Service) -
- All-new BMW model series for the lower midsize range - Rover and MG brands should be continued by Alchemy Partners
1999 Year of Business - Annual surplus of the BMW Group prior to extraordinary result with euro 663 million far higher than last year - Dividend remaining stable in 1999 - Reorientation involves one-off, non-recurring expenditure of euro 3,150 million
Munich. The Board of Management of the BMW Group has decided this week on the principal considerations in reorienting the Company and the Supervisory Board today agreed to the new strategy. This means that the BMW Group will be focusing on brands witch already have a leading position in their respective segments.
The distribution of the Rover and MG brands as well as their production facilities for these vehicles in Birmingham are to be maintained and continued by Alchemy Partners. Negotiations have started on the basis of an offer submitted by Alchemy Partners for this purpose.
All-new BMW model series The BMW brand is currently as strong as hardly any other car brand the world over. Now the BMW Group will capitalise on and further expand this postion of strength. The BMW Group has therefore decided to build on all-new model series under the BMW brand for the upper end of the lower midrange segment. The decision on where this model series will be built has not yet been taken.
Prof. Dr.-Ing. Joachim Milberg, the Chairman of the Board of the BMW Group, announced this new development in Munich on Thursday: "The new model series will consistently expand and strengthen BMW's entry-level position with the BMW standard. It will be a typical BMW! And it will therefore occupy and maintain a unique position in the upper part of the lower midsize range."
Restructuring of the Group's corporate units in Great Britain In this process of reorientation of the BMW Group, the corporate units belonging to Rover Group Ltd. are to be restructured. The Rover and MG brands as well as the production facilities for these vehicles in Birmingham are to be continued by Alchemy Partners. Negotiations have already started on the basis of an offer submitted by Alchemy Partners for this purpose.
The BMW Group will continue to supply Alchemy Partners with the Rover 75 on the basis of a job contract. For a certain period of transition the BMW Group will furthermore support Alchemy Partners in all necessary areas. Milberg: "We will do this in order to provide the quality of support. On that our customers can rely." Following successful conclusion of the negotiations the Rover and MG brands will be regrouped together within a new company under British management.
The original strategy was to compete through the Rover brand with mass-produced cars in the lower midrange segment. According to Professor Milberg, however, this Rover strategy within the BMW Group has turned out to be inappropriate for various reasons. Although the Rover turnaround was successful last year, the constant increase in the value of the British Pound has more than set off this success. Again to quote Milberg: "A further point is that the product offensive we initiated with the Rover 75, 25 and 45 was not as successful as we had hoped."
Yet a further point was that new investments of the amount foreseen at the Birmingham Plant, in particular for a new lower midrange Rover, had to be reviewed and considered more conservatively due to the high value of the British pound. With exchange rates versus the pound continuing to decline, mass producers on the European Continent have a growing advantage in competition. Precisely this is why the Board of Management has decided to take a clear and consistent step. Milberg: "Even with an extreme increase in productivity or through an extreme shift in sourcing into Euroland, we would no longer have been able to set off such burdens beyond our control."
Reorientation of the BMW Group - Summary:
- Responsibility for the Rover and MG brands, for the Birmingham Plant, and for sales of the cars built in Birmingham is to be assumed by a new owner. Negotiations have already started on the basis of an offer submitted by Alchemy Partners and we wish to quickly wind up these negotiation with a successful result. - Investments for the production of the new MINI in Birmingham are being stopped and will be continued instead at the Oxford Plant. The new MINI will be launched into the market in early summer 2001. - Production of the Rover 75 will be continued at the Oxford Plant on behalf of Alchemy Partners. Sales and distribution of the car will then be handled by Alchemy Partners itself. - An all-new model series will be developed within the BMW brand for the upper end of the lower midrange segment. This model series will then hold a special, unique position in that part of the market. - The BMW Group's new engine plant in Hams Hall in the British Midlands will be completed and enter operation as planned. - The Group's plans regarding the location of the plant in Britain for production of an all-new Rolls-Royce as of 2003 are not affected by this reorientation.
The Board of Management submitted this reorientation of the Group to the Supervisory Board on 16 March and the Supervisory Board expressed their approval.
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