BMW labor chief says he expects global demand to recover

Elisabeth Behrmann

BMW AG’s top labor representative is batting away gloomy predictions for the industry, saying he expects global demand to recover and the luxury carmaker’s output to jump by as much as a fifth over the next few years.

BMW, which includes the Mini and Rolls-Royce brands, will grow production by a market-beating 2% to 3% annually until about 2025, Manfred Schoch, who’s also deputy chairman of the company’s supervisory board, said in an interview. The forecast – against a backdrop of shrinking key markets – will require BMW to build two new plants.

BMW says the Vision iNEXT represents a building block for the future of the BMW Group, encompassing technology, design and new ways of thinking.

“We don’t expect the global car market to stagnate but grow by 1% to 2%,” said Schoch. “Based on our model planning at BMW we expect annual growth of 2% to 3%. So we need two more plants to do this, one in China and one in Europe.”

A spokesman for BMW declined to comment.

Such a rise would equate to as many as 500,000 additional cars by 2025, on top of the 2.5 million sold last year. BMW recently started output at a new factory in Mexico, and plans a 1 billion-euro ($1.1 billion) site in Hungary. It’s also boosting capacity in China to 650,000 cars from about 400,000 currently.

The rosy assessment from Schoch contrasts with signs of gloom in the industry, which is under pressure from a global economic slowdown and the strains of investing in electric-car production. Munich-based BMW, which this month replaced its chief executive officer after just one term, cut its outlook in May after making a provision in an alleged cartel case.

Even excluding this charge, automotive returns have dropped to the lowest point in 10 years.

BMW in June moved up a goal for a lineup of 25 electric and plug-in vehicles by two years to 2023. This puts the maker of the X7 sport utility vehicle on track to sell roughly 700,000 electrified vehicles by 2025. The manufacturer currently builds the i3 electric city car in Leipzig, Germany, and will make the upcoming iNext and i4 battery sedan at two other German sites.

“Setting up for the i4 in Munich will mean closing down the plant for nearly three months,” said Schoch. “But we’ve got to ready factories here to make electric cars. Otherwise we face sitting among ruins like in Detroit.”

And the pressure doesn’t stop there. At next week’s Frankfurt car show, anti-climate change protesters plan to bring the world’s biggest vehicle show to a standstill as manufacturers’ electric-car offerings sit next to gas-guzzling SUVs.

“If you look at an average household today, from the fridge to the hair dryer to the razor, all of these things are electric, the only thing that isn’t is the car,” said Schoch. “Cars will turn electric too, and whoever isn’t on board with this is a goner.”