LEIPZIG — BMW production chief Milan Nedeljkovic expects stabilizing supply chains to lead to a clear improvement in profitability next year.
From a production perspective, Nedeljkovic said he did not expect margins to fall.
“Repeated undersupply and needing to re-plan production brought a certain turmoil. A clear improvement in our margins should result purely from the stabilization we are seeing on this front,” Nedeljkovi said.
The shortage of semiconductors would likely impact the automaker until at least the middle of next year, he said in an interview at the automaker’s Leipzig plant in Germany.
Asked about new U.S. export curbs barring China from acccess to its semiconductor technology, Nedeljkovic said: “This tech decoupling is certainly increasing. But it will not be possible to make interdependence disappear in one go — the industry is too interconnected for that.”
Europe is falling behind the U.S. in its ambitions to become more independent in semiconductor supply, Nedeljkovic said, with both expressing the same intention but Europe offering less tangible action.
BMW cut its margin forecast in March for the cars division to 7-9 percent from 8-10 percent because of the impact of Russia’s invasion of Ukraine and said in August it expected slightly lower full-year sales than last year and a volatile second half.
Still, third quarter sales saw a smaller drop than the first two quarters, in part due to recovery in China.
But with Europe’s energy market and supply chain situation uncertain, Nedeljkovic was hesitant to pin down forecasts for next year’s output.
The automaker has said it could reduce gas intake by 15 percent in Germany to help stabilize energy supply through measures like lowering temperatures, but Nedeljkovic cautioned this depended on how cold the winter could get.
A strong believer in hydrogen as an alternative to gas, Nedeljkovic said BMW was in discussion with several energy suppliers in Germany about offtake agreements for green hydrogen, made from renewable energy.
“Of course, hydrogen is still more expensive than gas. There is not yet a business case, but it brings us further technologically towards sustainability… if we and others create demand, it will come into its own,” he said.