May 30, 2017

BMW production slowed on Bosch parts shortage

BERLIN -- BMW AG, the German luxury car maker, is slowing or halting production of certain models in response to a shortage of parts caused by delivery problems from supplier Bosch GmbH.


The hiccups in the normally smooth operation show how dependent manufacturers are on a global, smoothly running supply chain. Even small disruptions anywhere along the line can cascade into delays in getting the company's big money-making products off the assembly line and into showrooms.

In BMW's case, the culprit is a "Lenkergetriebe," or steering gears manufactured by Stuttgart-based auto-parts giant Bosch and used in BMW's 1-Series, 2-Series, 3-Series and 4-Series compact cars.

"Our supplier Bosch is not currently able to provide us with a sufficient number of steering gears," said Markus Duesmann, BMW board member in charge of purchasing and supplier network.

Bosch, in turn, said the trouble arose when a supplier in Italy experienced difficulties in delivering the casing for the steering gears. Bosch declined to identify the supplier.

As a result of the shortages, production is restricted at several BMW plants in Germany, the Tiexi plant in Shenyang, China, and at the company's plant in Rosslyn, South Africa, a BMW spokesman said.

"Automotive value chains are international. An interruption in delivery of parts from a partner in Europe can therefore also have implications in China," said Mr. Duesmann.

"The vehicle is not complete until all parts, most of which are supplied "just-in-time", are installed. It is, therefore, understandable how a missing part -- even if only a small one, as in this case -- can have a major impact."

BMW shares were trading about 0.25% higher at EUR84.52 in late afternoon in Frankfurt. Analysts at Equinet, a brokerage, said the costs to the company were likely manageable unless the interruption of production continued for several days.

"Bosch is working urgently in a task force together with BMW and the supplier to relieve the supply squeeze as soon as possible and keep the impact as limited as possible," Bosch said in a statement.

BMW said it doesn't know the extent of the financial damage or impact on production and sales caused by the break in production. A spokesman said the company hoped to restart assembly at the plants next week, but wasn't certain that would be possible.

BMW's plant in Leipzig in eastern Germany has been shut down since Friday. Plants in China and South Africa have brought forward planned production breaks and extended their duration.

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