Good news for BMW: what’s happening with production

BMW production in Munich and Dingolfing and Mini production in Oxford were affected by supply problems.

The BMW Group has said it will resume full production next week at factories that were shut down or slowed by supply bottlenecks after Russia’s invasion of Ukraine.

Earlier this month, production was cut off at factories in Munich and Dingolfing, Germany, and Oxford, England.

BMW said last week that it would start restarting factories, and the head of production, Milan Nedeljkovic, gave more details about the intensification at the carmaker’s annual press conference.

Production will resume later this week in Munich and Dingolfing, starting with a staggered acceleration before returning to normal levels on March 21, BMW confirmed.

Production of Mini vehicles in Oxford is set to stop this week, but will intensify again next week, Nedeljkovic said.

Nedeljkovic also said that BMW has the flexibility to recover any lost production, although it will not provide a figure for potential losses due to the shortage of supplies caused by the war.

Analysts say up to 15% of European car production could be affected by the conflict, largely due to a shortage of parts built in Ukraine and other supply chain disruptions.

The Germans are not wasting their time

Nedeljkovic said the Munich plant was using downtime to advance modernizations and technical changes that were scheduled for this fall, releasing capacity later in the year. “We have a lot of experience in this field because of semiconductor problems,” he said.

BMW said in a statement that the situation in Ukraine remained volatile. The carmaker still expects war-related supply restrictions as well as continued semiconductor blockages, which could lead to further production adjustments.

“We are still in intense discussions with our suppliers,” the statement said. “Together with them, we continuously assess the situation and define measures to ensure production in the best possible way, in order to be able to meet the continuous high demand of customers.”

BMW on Wednesday lowered its car margin forecasts due to the war in Ukraine. The carmaker now estimates that the margin in its car segment before interest and tax (EBIT) will be between 7% and 9% due to the effects on production. Margins in 2021 were over 10%.

Without the impact of the war, BMW would have targeted a range of 8% to 10%, the company said.