Supply Hitches Causes Production Disruption At BMW

BMW AG has revealed that it will be demanding compensation from its parts supplier, Robert Bosch GmbH, following production stoppages that were caused by delays in the delivery of parts. The production stoppages occurred in South Africa, China and Germany. Specifically a scarcity of steering gear systems supplied by Bosch caused the production hitches. Bosch is the largest supplier of car parts in the world.

According to the purchasing chief at BMW, Markus Duesmann, the steering parts shortage has consequently resulted in limited production occurring in Rossylyn, South Africa; Tiexi, China and a couple of plants in Germany.

Electronic steering systems

In a statement that was sent by electronic mail, Bosch disclosed that the disruption was brought about by a bottleneck at the Italian firm which supplies casings that are used to make the electronic steering systems of Bosch. The car parts supplier revealed that it was working intensively with its partners and had already dispatched its members of staff to Italy so that they can assist in getting a solution.

Duesmann expressed confidence that Bosch would soon be able to solve the problem.

“As one of our largest, longest-standing and generally highly reliable suppliers, we have no doubt that the company [Bosch] is capable of managing this difficult situation,” said Duesmann.

Litany of problems

The supply hitch is the most recent problem for Bosch as only last week it was revealed that it would be co-defending a lawsuit that has been filed against General Motors. Bosch has also faced accusations over its involvement in the diesel cheating scandal involving Volkswagen AG.

Speaking by phone, a spokesperson for BMW, Michael Rebstock, revealed that it was not possible to determine how much it was costing the German luxury car maker financially as a result of the parts shortage. Rebstock also added that it was impossible to tell when normal operations would resume.

The BMW models that have been most affected by the supply bottleneck are the 1-series compact car, the 2-series compact car and the 4-series coupe. Larger models such as the SUVs and the 7-series sedan have not been affected.

The disruption comes at a bad time for BMW since the luxury car maker had just recorded reduced profitability in its first quarter. This was blamed on the overhaul of key models and increased investment on new technologies that the car maker is undertaking with a view to narrowing the gap with Mercedes-Benz. Compared to a year ago, BMW increased the number of cars it delivered by 5.2%. Mercedes, on the other hand, increased its deliveries by 16%.

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