BMW is planning a major expansion in its use of standardized, off-the-shelf components as the German automaker looks to reduce costs, accelerate development and improve profit margins while preserving the qualities that define its vehicles.
BMW Targets More Standardized Components
The strategy could make parts sharing a much larger part of BMW’s business. The company expects standardized components to represent the largest share of its roughly €80 billion annual purchasing budget by 2032, while its use of bespoke components is set to fall by half.
Component sharing is already common across the automotive industry. Automakers use shared sensors, electronic modules and mechanical components such as transmissions, but BMW wants to rely much more heavily on parts developed by suppliers to industry standards and sold to multiple automakers.
How Standardized Parts Could Cut Costs
The approach is designed to create economies of scale. When suppliers can sell the same component to several automakers rather than developing a unique part exclusively for BMW, they can produce larger volumes and reduce the cost per unit.
BMW would also save money and development resources by avoiding the need to engineer every component from scratch.
Milan Nedeljkovic, BMW’s new CEO, said the company should make use of existing industry standards when they make sense.
“There are industrial standards on the market which are convincing, and it would be wrong not to use them,” Nedeljkovic said.
BMW maintains that increasing the use of standardized components will not compromise quality, performance or the brand’s identity.
BMW Looks to Close Cost Gap With Chinese Automakers
The strategy is part of BMW’s effort to narrow the cost gap with Chinese automakers. Chinese brands have become increasingly efficient by sharing components across brands and models, allowing them to develop vehicles faster and offer them at competitive prices.
BMW wants to capture some of those efficiencies while maintaining the premium positioning that allows the automaker to charge more for its vehicles.
BMW Is Cutting Costs in Other Areas
Standardized components are only one part of BMW’s broader cost-cutting effort. The automaker recently outlined plans to reduce the number of model variants, eliminate the 2 Series Active Tourer without a successor, and cut divisions and related management positions by 20% by mid-2027.
BMW is also applying its efficiency strategy to its Chinese operations. The company wants to locally produce and tailor at least 95% of the cars it sells in China by 2030.
BMW is also considering exporting vehicles built in China to other Southeast Asian markets.
BMW Aims to Cut Costs Without Changing the Experience
The increased use of standardized components does not mean BMW vehicles will necessarily look or feel different to customers. The company says the strategy is intended to reduce costs while maintaining quality, performance and the brand identity.
If BMW can achieve those goals, the changes could remain largely invisible to drivers while allowing the automaker to reduce the cost of developing and producing its vehicles.
