Relations Thaw Between Daimler And BMW. Or Not

A few weeks ago TTAC reported how BMW and Daimler revived a long-ago formed joint purchasing venture in order to help drive down costs for the 2 independent car makers who can’t achieve high volumes of scale. This was seen as quite a big step in a direction few expected. As our resident German put it, “If you think South Korea and North Korea have communication problems, then you should be in a meeting between Daimler and BMW engineers.” He does have a way with words, doesn’t he? But he wasn’t wrong. It’s been a bit of joke to in the industry how Daimler and BMW view each other. As the mustachioed one put it, “Daimler engineers view their colleagues as boorish Bavarian upstarts. BMW engineers think Daimler is a congregation of has-beens.” And you thought relations between GM and Toyota were frosty! At least they had a plant together. Well, it seems that relations maybe thawing between the boys in Munich and the lads in Stuttgart. Kind of…

Supplymanagement.com reports that BMW is predicting that the joint purchasing venture between Daimler and BMW will expand and generate savings of up €100m (about $127m) a year from 2012/2013. A spokesperson for BMW confirmed that it was looking to expand the number of parts they currently buy via the joint venture. “Discussions are ongoing. We might expand if we find further parts and components to buy together” said the BMW spokesperson. However, what was telling was Daimler’s take on the issue. A Daimler spokesperson said “We are not making any forward projections of this kind. The co-operation has been going on for a while and is going well. We focus only on component areas that are not relevant for brand differentiation.” That was rather frosty! Why so cold to BMW? Daimler now owns small stakes in Renault and Nissan and vice-versa. This is a much stronger tie than a shaky joint venture with a bunch of people you don’t really like. There’s nothing to stop Daimler, Renault and Nissan forming a purchasing venture of their own to help drive down costs. The scale of the venture could bring costs down much more than the venture Daimler has with BMW. I hope BMW brought a thick coat. They may get left out in the cold.