Steering parts shortage stalls BMW car production

Delivery bottleneck at parts supplier Bosch may cost luxury carmaker millions

“A missing part – even if only a small one, as in this case – can have a major impact,” said BMW’s Markus Duesmann. Photograph: Benoit Tessier/Reuters

“A missing part – even if only a small one, as in this case – can have a major impact,” said BMW’s Markus Duesmann. Photograph: Benoit Tessier/Reuters

 

BMW was unable to complete the building of thousands of luxury cars this week because of production problems.

A shortage of steering systems from Bosch, the world’s largest supplier of car parts, was the cause of the disruption.

Car manufacturing is complex and BMW typically relies on “just-in-time” production, meaning that it orders parts only when it needs them.

Disruptions can, therefore, have immediate impact. In this case, the supply shortage has already affected production in Leipzig and Munich in Germany, as well as Rosslyn in South Africa and Shenyang in China. 

“A missing part – even if only a small one, as in this case – can have a major impact,” said Markus Duesmann, BMW board member overseeing purchasing and supplies.

‘Limited production’

He said “only limited production” of BMW 1-, 2-, 3- and 4-Series cars was possible and that BMW expected Bosch to compensate it for damages. 

Up to 17,500 such units are built each week, according to Christian Ludwig, analyst at Bankhaus Lampe in Düsseldorf.

“If these figures cannot be made up for during the quarter the sales impact would be €400-€500 million per week,” he said. The impact on earnings, on an operating margin of 9 per cent, would be up to €45 million. 

Bosch said the problem stems from a sub-supplier based in Italy, which delivers the housing for electric steering systems it sends to BMW. It said Bosch associates were on site in Italy “doing all they can to resolve the delivery bottlenecks”.

Standstill

Jochen Müller, a BMW spokesman in Leipzig, said production of the 1- and 2-Series cars had come to a standstill on Friday and Saturday, whereas production of the i3 and i8 electric cars was running as normal.

The plan, he said on Sunday, was to resume production by Tuesday, but BMW conceded on Monday that the “situation is unlikely to change this week”. – (Copyright The Financial Times Limited 2017)

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