Berlin, Germany, March 9, 2018 – Next a production halt earlier this week due to supply chain concerns brought on by Russia’s invasion of Ukraine, a company spokeswoman announced on Wednesday that BMW will gradually resume production at its Munich and Dingolfing factories the following week.
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Due to supply constraints, BMW is halting manufacturing at its facilities in Germany and other European nations.
Following the disruption of wire harness deliveries from Ukraine, BMW has halted production in its European operations. The iX electric SUV’s manufacturing process in Dingolfing is displayed.
Germany — Due to the interruption of essential component deliveries caused by Russia’s invasion of the Ukraine, BMW is being forced to cease manufacturing of BMW and Mini vehicles in its German and other European plants.
Next week, vehicle production at the BMW facilities in Munich and Dingolfing, both in Germany, as well as at the Mini facility in Oxford, England, will be suspended.
BMW’s Steyr, Austria, engine factory will likewise stop producing engines.
“The production of the country’s supplier business is being greatly impacted by the situation in Ukraine. Multiple BMW plants will experience further production adjustments and disruptions as a result of the production stoppages that occur “The Frankfurter Allgemeine Zeitung was informed by a company spokesman.
At BMW’s factories in Leipzig and Regensburg, both in Germany, shift adjustments will also be required, the official informed the publication. One of the two shifts in Leipzig will be canceled. Production will only be available during one shift in Regensburg.
Because they employ alternative suppliers, BMW’s plants in China, Mexico, and the United States are not affected, a representative for the company told the Sueddeutsche newspaper.
The Ukraine conflict is having an impact on practically all of the automaker’s European output as a result of the stoppages.
Similar to other automakers affected by the supply disruption, such as Stellantis and Volkwagen, BMW has organized a crisis team.
According to a BMW official who talked to the Frankfurter Allgemeine Zeitung, specialized departments are in close contact with suppliers to obtain supplies through alternative production sites and to restore production as soon as feasible.
The halts were brought on by the disruption of wire harness deliveries that BMW sources from western Ukraine. The electrical systems of a car rely heavily on the harnesses.
German cable manufacturer Leoni, which operates two operations in Ukraine and employs over 7,000 people, announced that it is stepping up efforts to increase capacity at other sites in an effort to assist offset the disruption in Ukraine while putting the wellbeing of its workers first.
A spokeswoman for Leoni stated in a statement that “logistics in and out of Ukraine are a particular problem, especially because of the partially chaotic situation at the border crossings with the EU.”
According to the German auto lobby group VDA, 49 production facilities are maintained by German automobile businesses and suppliers in Russia and Ukraine.
BMW also announced that it will stop producing cars in Russia and that it had stopped exporting vehicles there.
At a plant in the Russian exclave of Kaliningrad that BMW has run with local partner Avtotor for more than 20 years, around 12,000 automobiles were manufactured there last year.
According to the Moscow-based AEB industry group, the number of BMW brand vehicles sold in Russia increased by 10% to 46,802 last year.
Supply problems have affected the output of Mini at Oxford, Dingolfing, and Munich for BMW.
Due to supply-chain problems related to Russia’s invasion of Ukraine, production of the BMW i4 EV in Munich was stopped.
Germany — BMW Group announced that full production at plants that had been halted or hampered by supply shortages during Russia’s invasion of Ukraine will restart the following week.
At the beginning of this month, production was halted at plants in Oxford, England, Munich, Germany, and Dingolfing, Germany.
BMW announced last week that it would start to restart the factories, and on Wednesday, during the automaker’s annual press conference, production chief Milan Nedeljkovic provided more information about the build up.
Mini vehicle production in Oxford is still halted this week, but Nedeljkovic indicated it will resume next week.
Nedeljkovic claimed that BMW has the capacity to make up for any lost production, but he did not provide an estimate of possible losses owing to anticipated supply constraints brought on by the war.
According to analysts, the conflict may have a negative impact on up to 15% of European auto manufacturing, primarily due to shortages of parts manufactured in Ukraine and other supply chain bottlenecks.
The Munich facility, according to Nedeljkovic, is using the downtime to forward renovations and technical transitions that were planned for this fall, freeing up capacity later in the year. Because of the semiconductor problems, “We have a lot of experience in this,” he claimed.
The unstable nature of the situation in Ukraine was noted by BMW in the statement. The automaker continues to anticipate supply limitations brought on by the conflict as well as ongoing semiconductor difficulties that may necessitate more alterations to production.
According to the statement, “we are still having extensive discussions with our suppliers.” “We are regularly evaluating the situation and outlining actions to secure production in the best way possible to be able to satisfy the sustained high consumer demand, together with them,” they said.
Due to the conflict in Ukraine, BMW lowered its prediction for automotive margins on Wednesday. Due to production-related factors, the manufacturer now expects its vehicle segment margin before interest and taxation (EBIT) to be in the range of 7 percent to 9 percent. The margins in 2021 were greater than 10%.
According to the company’s statement on Wednesday, BMW would have aimed for a range of 8 to 10 percent without the effects of the war.
Due to a chip shortage, BMW stops producing 10,000 vehicles.
BMW reported on Tuesday that a persistent semiconductor supply deficit was affecting nearly all of its German operations and that it was now delaying the luxury automaker from finishing about 10,000 vehicles.
The Munich-based business claimed earlier this month that the bottleneck, which has impacted automakers worldwide, had already resulted in a loss of production of 30,000 vehicles so far this year.
As the Ukraine conflict affects part suppliers, BMW suspends production in critical factories.
BMW’s Munich and Dingolfing, Germany, facilities, as well as its Oxford, England, and Steyr, Austria, facilities for engines, will all be shut down.
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Due to its inability to obtain some critically required parts from Ukrainian suppliers in the wake of that country’s invasion by Russia, German luxury automaker BMW will be forced to cease production in many of its important European manufacturing facilities over the course of the coming week.
A business representative told a local newspaper that BMW’s Austrian engine facility in Steyr, its MINI manufacturing in Oxford, Germany’s Munich, and Germany’s Dingolfing facilities will all be idled. The automaker’s other plants in Leipzig and Regensburg are also adjusting their production shifts.
Transmit this tale
This week, it appears that there was no optimism left that the supply chain difficulties in the auto industry would ease. The invasion of Ukraine by Russia has forced BMW and Volkswagen to cease operations at several of their factories in Europe. And a COVID-19 epidemic in China forced the closure of factories owned by Toyota, VW, and now Tesla.
One of the first to be impacted was VW. The business, which manufactures the electric ID.4 crossover at its facility in Zwickau, Germany, stated in late February that it will halt production there for four days. Volkswagen also announced a three-day shutdown of a facility in Dresden.
Early in March, a Porsche document that had been leaked inside the company stated that the automaker had also been impacted and that all Porsche models will be delayed as a result.
BMW experienced difficulties as well, closing its Oxford, England, facility for Mini as well as factories in Munich and Dingolfing, Germany. The biggest problem? wiring looms.
20,000 people in Ukraine have jobs in the wire harness business, according to Frank Weber, a member of the BMW board of management responsible for development, at a roundtable discussion on Wednesday. According to Weber, “For BMW, these are often smaller wiring harnesses, such engine transmission wiring harness.” “A complete wire harness [manufactured] in Ukraine” is only used in one model.
Weber continued, “So we don’t only want to take away to work there.” “In order to assist us in building up those wiring harnesses [in Germany], we have replicated machines. Then, working with the suppliers in their capacity-rich locations outside of Ukraine, we were able to create backup plans very rapidly. We were able to declare that we will restart all of our work starting next week as a result, although as you can guess, it is a sad scenario.”
The automaker’s stated official explanation is related to the current “geopolitical environment.”
In the wake of Russia’s invasion of Ukraine, a number of automakers have announced production interruptions, with BMW being the most recent. Its partnership with Avtotor to put semi-knocked-down (SKD) kits together for cars has abruptly come to an end “due to the current geopolitical environment.” A firm spokesperson made the claim while chatting with Reuters.
For the same reason, the luxury brand has temporarily ceased shipping cars to Russia. BMW condemned the assault against Ukraine and followed developments with deep concern and dismay, a spokeswoman for the company said in a separate statement to The Wall Street Journal. Additionally, because some suppliers are headquartered in the conflict-torn Ukraine, manufacturing bottlenecks are anticipated at other plants outside of Russia.
Just a few weeks after BMW renewed its cooperation with Avtotor through 2028, the German automaker decided to halt automobile manufacture in Russia. In order to handle a full manufacturing cycle rather than just SKD kits for the top-selling models in the nation: the 5 Series, X5, X6, and X7, the Kaliningrad factory will be renovated.
At the time of the announcement in mid-February, the investment, at least 32 billion RUB, was equivalent to $414 million. However, due to recent sanctions imposed by the European Union, the value of the Russian currency has fallen, and those 32 billion RUB are now only worth $300 million.
After terminating prior contracts with Chery Automobile and General Motors, Avtotor is now conducting business not just with BMW but also with Kia and Hyundai. Before the partnership with GM terminated in 2015, the Kaliningrad plant produced models like the Cadillac Escalade and Hummer H2.
Why has BMW stopped making cars?
Last October, Oliver Zipse, CEO of BMW, stated in his capacity as president of the European Automobile Manufacturers’ Association that the shortage of microchips will persist through 2022. The chief executive was spot on because automakers occasionally halt production as a result of a lack of chips. BMW is the next to cease car production, this time at the Regensburg plant in Germany.
According to a representative quoted by Automobilewoche, the factory would be closed for at least a week. When production capacity is utilized, BMW typically assembles 1,000 X1 and X2 crossovers every day. To what extent the semiconductor inventory will increase to a healthy level by next week so that production may resume is still uncertain.
This Thursday, a decision will be made, and production pauses are anticipated after that. It has happened before; at the end of February, activities at the Regensburg were also suspended. Later, just one shift showed up for work since BMW was short on the parts it needed to run at full capacity.
The representative for the plant claims that the delay is the result of “a combination of semiconductor difficulties and supply bottlenecks caused by the Ukraine war.” Following 2021, when they produced a total of 183,485 cars, the abrupt halt will affect about 9,000 workers.