BMW to beat €4B savings, helped by Mercedes linkup

Bayerische Motoren Werke AG, the world's largest maker of luxury cars, will "significantly" surpass its goal of reducing spending on components and supplies by 4 billion euros ($5.2 billion) by 2012, helped by a partnership with Daimler AG's Mercedes-Benz.

Talks between BMW and Mercedes have yielded new projects over the past several months that will help each company reduce spending by 100 million euros a year by 2012, Herbert Diess, BMW's purchasing chief, said in an interview in Munich.

"We can say that from today's perspective we will certainly and easily reach the 4 billion-euro savings goal, and even significantly surpass it," said Diess, the BMW management board member responsible for the cuts.

BMW may report first-quarter net income of 264 million euros today after a 153 million-euro loss a year earlier, according to the average estimate of eight analysts surveyed by Bloomberg. BMW is seeking to raise profitability as Mercedes-Benz and Volkswagen AG's Audi luxury unit step up pressure.

Audi intends to dethrone Munich-based BMW as the luxury leader by 2015, while Mercedes, which was toppled by BMW in 2005, has vowed to take market share this year by growing at twice the pace of the global car market. BMW is responding by trimming costs and expanding product offerings.

"The strategy that BMW seems to be following is proliferation of product," said Christoph Stuermer, an automotive analyst at IHS Global Insight in Frankfurt. "The question is can they still handle that? Or will it come back to bite them?"

Model Offensive

In addition to rolling out a revamped 5-Series and the new Mini Countryman this year, a line of electric-powered city cars is due to be introduced by 2013. The maker of Mini and Rolls- Royce vehicles is also developing front-wheel drive compacts for the namesake brand, as part of its target of boosting sales to 2 million vehicles by 2020 from at least 1.3 million this year.