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BMW Production May Shift Due To Politics

In all their years of operation, BMW has tried hard not to get dragged into politics. As far as Germany’s most prestigious car manufacturer is concerned, they don’t mind who’s in charge of which country so long as that country carries on buying BMWs. It’s worked fine as a strategy for more than eighty years, but global political affairs appear to be about to stage a two-pronged assault on BMW and its factories.

As anybody who follows political news will already be aware, there are two major global factors currently in play which are expected to have an enormous impact on the world’s economy. One of them is the ongoing trade war between the United States of America and China, which has seen tariffs imposed on both sides, and companies which rely on import or export from one country to the other facing elevated costs as a result. The other is Brexit – the ongoing process of the United Kingdom leaving the European Union. The status of both situations often seems to change on a daily basis, making it difficult for BMW – along with many other international companies – to make long-term plans.

Long term planning in companies the size of BMW relies on being able to accurately forecast how the economy is going to perform over months and years, as opposed to days and risks. When a situation is unstable, you can no more predict the future of an economy than you can predict the outcome of your next spin on a mobile slots game. The comparison is apt; playing mobile slots is something that brings a lot of people a lot of pleasure – especially when they win. Big business, however, doesn’t like to take gambles with strategy and planning. BMW executives may or may not visit mobile slots websites or their in their spare time, but they certainly don’t want to employ a mobile slots game strategy to their financial forecasting practices. It now appears that they’ve tired of waiting for either of the situations to reach a resolution, and are instead taking protective action.

The first piece of news – which is potentially bad news for customers who deal with BMW in the UK – is that BMW has at its plant in Oxford, England, in the event that the UK leaves the EU without any deal being struck about the future trading relationship with the European bloc. The company has already set aside more than $300m in contingency funds in the event of such a scenario, and has warned that prices in the UK would increase if no deal was reached. That would mean fewer BMWs being built in the UK, and potentially the loss of BMW jobs. It would also mean that BMW enthusiasts within the country will likely find it more expensive to acquire new BMW vehicles in the future.

The second piece of news relates to the American-Chinese issue. The company has long been weighing up a production decision on the popular X5 sports car. Prohibitive tariffs have meant that Chinese buyers have been faced with enormous costs when importing the X5, and so the company has now announced plans to simply start building the car in China instead, thus eliminating the need to worry about whether or not tariffs will exist from one day to the next. Boosting production in China will likely mean reducing production in the USA, which may mean that some American BMW workers will soon be dealing with similar issues as the ones faced by their British colleagues.

As well as dealing with changes in the physical production of their cars, BMW might soon find themselves having to make changes to their sales strategy in Japan. BMW Japan has by the Japanese Fair Trade Commission, who have received complaints about the targets being imposed on sales workers within the Japanese arm of the company. The allegations against the company – which are still being investigated – are that the sales targets imposed on staff are too high ever realistically to be attained, and that workers are forced to buy cars from the company as a punishment for missing the targets. BMW is yet to comment on the story other to confirm that the raid has taken place, and that they’re offering their full cooperation to the authorities.

Reports coming out of Tokyo – which is where BMW Japan is based – say that Japan’s anti-trust organization believes that the questionable business practices within the company began several years ago, and started when Mercedes-Benz and other luxury car companies began eating into BMW’s share of the market within the company. There is no suggestion that the practice has been repeated at any other international arm of BMW such as the US or the UK, and nor has a similar allegation been made in Germany. It’s thought and hoped that if the stories are true, they’re limit to one office within one country, and not indicative of a wider issue.

All three issues together have contributed to a number of negative news reports for BMW in a short space of time. The Japanese issue is being seen as a scandal, the British issue is being presented as the company withdrawing from the country, and the American issue has led to accusations of anti-American business practices by way of moving production out of the country to a rival nation. BMW could do without such distractions – they showcased a number of exciting new cars at the recent Frankfurt Motor Show including the BMW I Hydrogen Next, the Concept 4, and the X6 Vantablack. They would much rather the press was talking about how great their new cars are rather than where they’re made, and how they’re sold.

The bright spot for the company is that despite the political upheaval, they don’t currently anticipate any of their changes in strategy to impact on productivity or profitability, and so the supply of new BMWs won’t be affected in any way. We hope for the sake of our British readers that the situation with the European Union is resolved amicably – being a BMW fan can be an expensive business at the best of times, and having further charges added because of political disputes is the last thing anybody wants to be dealing with!

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