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BMW Discovers Joint Ventures Aren’t Easy


On paper, joint development programs, and the sharing of components and manufacturing facilities, always seem like a good idea. But as BMW is finding out, getting them to work smoothly in practice is a whole different ballgame.

Take the tie-up with Toyota. Project G29/J29—the new Z4 roadster and Toyota Supra coupé—seems to be going to plan. Both cars were engineered by BMW and both are, for reasons of parity, to be built by Magna. But a proposed jointly developed small-car architecture has gone nowhere. A classic case of Not Invented Here? That, and a handful of contributing negative factors like unfortunate timing, changing strategic targets, and a clash of philosophies.

Meanwhile, the on-again, off-again BMW-McLaren deal is… off. Again. The idea was to wrap the next-gen McLaren Super Series in BMW bodywork, dress up the cabin accordingly, and develop bespoke cylinder heads for the V-8 engine part of the mild hybrid powertrain. Frank van Meel, head of BMW’s M division, reportedly spent more nights in Woking than in Munich over the summer, but as of now the Anglo-German Ferrari fighter has been parked.

How come? “It’s a great piece of kit,” acknowledged a senior BMW manager. “But we came to the conclusion that it is the wrong car for these fast moving times.” The thinking in Munich now is BMW will go it alone with a car that’s more highly advanced in terms of the electrification of its powertrain.

There is, however, another Anglo-German venture that seems on track. Project Jennifer is most probably the last V-8 engine BMW will share with JLR’s Range Rover division, but it will be going out with a bang. The most potent iteration of the 4.4-liter, twin-turbo engine, dubbed S63, is said to be good for 640 bhp and 590 lb-ft of torque.

At the other end of the scale, BMW has recently started talking to Chinese automaker Great Wall whose luxury division, Wey, put in a surprise appearance at last year’s Frankfurt Show. The topic of discussion is UKL1, the front drive architecture that underpins Mini. The idea is to jointly develop a new cost-effective small-car matrix for production in China and, in a subsequent step, perhaps also Europe.

Assembly would commence in 2022 when the next-generation Mini is due. The line-up is tipped to include the three- and five-door hatches, Clubman, Countryman, convertible, and the Mini EV. The projected annual output of the Mini EV, codenamed U2X, alone is close to 30,000 units.

In total, we’re talking approximately 375,000 vehicles. Add to that related front-wheel drive BMW models, which should account for over 450,000 units by 2022, plus at least 275,000 X1/X2 SUVs per year.

Those big volumes mean this is a big deal. But there are big questions, too. Can a credible common denominator be found for German engineering excellence and Chinese cost efficiency? Would such an agreement upset the cooperation between BMW and Brilliance? What damage may a tie-up with Great Wall do to the BMW brand image? Watch this space…

Perhaps the most interesting potential partnership involves Daimler. The two were reportedly contemplating combining R&D efforts on brand new, fully flexible and scalable, convergence vehicle architectures, one for small to mid-size cars, and one for mid-size to large cars, including SUVs. It’s not the first time the two rivals have considered joining forces: Back in 2008, they were working on an engine joint venture until top management on both sides had second thoughts.

This time things looked more promising until the July 2017 cartel scandal, in the wake of which Daimler filed a self-indictment to avoid penalty. Apparently, Stuttgart did so without consulting its allies, including BMW, which subsequently broke off all negotiations. As a result, the joint program is now in limbo, and it may in fact be called off for good.

Even though enthusiasm for the project seems to have vanished in Munich, the opportunities may be too tempting to ignore. Preliminary calculations potential cost savings over time of $9 billion to $12 billion—per partner. True, a certain percentage of this sum would have to be reinvested to warrant the mandatory interbrand differentiation.

But, says a senior exec familiar with the matter: “The money we are about to invest in battery electric vehicles and digitalization must be earned by conventional products. By teaming up with another OEM, this immense outlay could be split in half, which would make a huge difference to the bottom line.”

According to the Munich grapevine, production would initially be in two new factories masterminded by BMW and Daimler. If hurt pride and tarnished trust can be overcome, this super deal could be only six years away.



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