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ots Ad hoc-Service: BMW AG <DE0005190003> BMW Group Resolves Reorientation (Part 1 of 2)

Munich (ots Ad hoc-Service) -

The sender is solely responsible for the contents of this
announcement.
Reorientation
- 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.
Part 1 of 2
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