Carmakers on hiring spree

BMW is developing a roadster version of its hybrid i8 supercar (above).
BMW is developing a roadster version of its hybrid i8 supercar (above).PHOTO: AGENCE FRANCE-PRESSE

BMW, Volkswagen and Daimler expanding workforce and boosting R&D to keep pace with the industry's rapid changes

Are the robots going to take all the jobs? If automotive technology is your thing, then it looks like your job is safe - for now. BMW's workforce expanded 4.4 per cent over the past year to almost 123,000 employees, according to first quarter figures released this week.

BMW has been recruiting engineers and other experts as it seeks to keep pace with rapid changes in digitalisation, automated driving and mobility services.

BMW is not the only German carmaker on a hiring and spending spree. Volkswagen's workforce expanded 3 per cent to 610,000 last year while Daimler plans to hike R&D spending by 9 per cent to an average of €7 billion (S$11 billion) over the next two years.

This is great news for the wider economy, where there is a serious dearth of companies willing to invest and create jobs. But it is of more questionable benefit for auto sector investors.

In the short term, spending depresses profits - BMW's earnings before interest and taxation declined 2.5 per cent in the three months to the end of March.

At the same time, the company's research and development expenses jumped 5 per cent from a year earlier  while hiring also boosted its selling and administrative expenses (these accounted for 9.5 per cent of revenues in the period, compared to 9 per cent last year).

Given the competitive threat posed by the likes of Apple, Google, Tesla and Uber, BMW and its rivals have little choice but to splash large sums on new technology and software engineers.

It remains to be seen, however, whether this spending will end up lifting margins or whether it is yet another instance of the car industry consuming huge amounts of capital for modest returns.

Meanwhile, BMW chief executive Harald Krueger said the carmaker had enough staff to continue developing its cutting- edge electric vehicles programme known as Project i, despite recent defections of key staff to a Chinese electric vehicle start-up.

"Overall, four people have left the company, not all were working on the i project," Mr Krueger told analysts on a call to discuss first-quarter results.

BMW is developing a roadster version of its hybrid i8 supercar, as well as a next-generation electric autonomous car which is known as iNext.

"R&D development of iNext will start now. And we have the people on board to do so," Mr Krueger added.

Earlier this year, Mr Carsten Breitfeld, vice-president engineering, head of the i8 vehicle programme; Mr Dirk Abendroth, manager of BMW's "i" powertrain group; and Mr Henrik Wenders, vice-president, product management BMW "i", joined China's Future Mobility Corp, a start-up backed by Tencent Holdings.

BLOOMBERG, REUTERS

A version of this article appeared in the print edition of The Straits Times on May 07, 2016, with the headline 'Carmakers on hiring spree'. Print Edition | Subscribe