BMW 2007 Annual Report Download - page 197

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Profitability. How can we reduce cost per vehicle produced? How can
we reach economies of scale? How can we minimise the effect of exchange
rates? How can we create added value for our customers and achieve an
adequate price for our products?
Profitability and earnings quality are the decisive factors in everything we do; our goal is inde-
pendence. We consider it vital to apply the capital provided in such a way as to make investing
an attractive option for our shareholders by generating positive results in our operating activi-
ties. People investing in a premium manufacturer expect a premium return. Therefore, we
have to concentrate on those business areas promising a return on investment that matches
our premium aspirations. At the same time, we never lose sight of guaranteeing our company’s
lasting independence.
More output from less input. That is the philosophy behind EfficientDynamics. This idea is not
only applied to our products, but also to the entire company. As far as costs are concerned,
we understand less input as: re-evaluating all cost structures and achieving an increase in
efficiency of at least five percent a year. We have set up a far-reaching programme that will
help us tap into an efficiency potential of approximately six billion euros by 2012. We will
invest in future technologies while reducing costs, investment and therefore reduce capital
applied per unit. So growth will remain the driving force behind our success.
Exceeding this growth, we intend to achieve economies of scale by establishing collabora-
tions in the areas of components, drive systems and modules. It has always been one of
the BMW Group’s key strengths to make best use of project-based cooperation and
cost-
efficient networks. In 2007, we concentrated strongly on collaborations in the areas of engine
development and hybrid technology.
A factor that is highly relevant to our profitability targets is that our cars and motorcycles are
popular all over the world. For our automobiles the United States have been the most important
individual market for years. This is why we depend to a large extent on the development of
currency exchange rates, mainly between the US dollar and the euro. In order to minimise the
effect, we will in future increase our purchasing volume in the US dollar area as well as the
number of units produced in the United States. This is why we will stock up production
capacities of our US plant in Spartanburg to 240,000 units to be applied, among other things,
to the production of the successor of the current BMW X3. Our supplier network and our glo-
bal purchasing structures will also have a share in strengthening our natural hedging activities.
As far as performance is concerned, we understand more output as continuing to position
our vehicles consistently in the premium segment. Premium is what we do best. This is
our key strength, and this is where we achieve our best results. Our customers, employees
and shareholders stand to benefit from our accomplishments in this segment. Additional
earnings potential will arise from expanding present operations and launching new activities.
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