BMW may buy more Japanese parts

BMW AG, the world's largest maker of luxury cars, is considering buying more parts from Japanese suppliers to offset the decline of the yen against the euro.

"We're looking at ways to increase our natural hedge, including buying more Japanese parts," management board member Stefan Krause said in an interview during the Tokyo Motor Show yesterday.

The euro has gained 8.8 percent against the yen in the past year, eroding earnings on cars built in Europe and sold in Japan. Most of the BMW vehicles sold in Japan are imported from Germany, said Krause.

"BMW has certainly taken a bigger hit on the yen than others," said Michael Tyndall, an analyst at Nomura Securities in London. "They had favorable hedges on the yen a few years ago and the yen became a big issue as those unwound."

BMW is hedged against the yen, Krause said yesterday, without elaborating.

The Munich-based carmaker expects to reach a sales target of 150,000 units in Asia in 2007, a year earlier than planned, Krause said. Sales in Japan will rise above last year's figure, he added.

Daimler's costs

Daimler AG, the world's second-largest luxury carmaker, may be able to reduce costs and improve profitability by cooperating with BMW.

"Any savings we would gain would be on top of the targets we have already announced," said Daimler Chief Executive Dieter Zetsche, speaking to journalists at the Tokyo Motor Show.

"We are speaking with competitors, including BMW." He declined to discuss any other possible partners.

The German carmaker aims to boost its profit margin by 1 percentage point a year through 2010, achieving 10 percent return on sales by that year. Stuttgart, Germany-based Daimler aims to cut development costs through partnerships to offsets higher costs from rising commodity prices and increased regulation.

"Daimler and BMW are certainly large companies, but they are nowhere near the scale of Toyota," the world's second-largest carmaker, said Tyndall. "It's crucial that they partner up."

Bloomberg News

(China Daily 10/25/2007 page16)