BMW, Daimler eyeing tie-up to make key car components

A BMW factory in Leipzig, Germany, in 2013. Carmakers are joining forces to cut costs and be more agile in the race to dominate digital services such as ride-hailing.
A BMW factory in Leipzig, Germany, in 2013. Carmakers are joining forces to cut costs and be more agile in the race to dominate digital services such as ride-hailing.PHOTO: REUTERS

FRANKFURT • Daimler and BMW are considering joining forces to make key automotive components, a move that would tie the luxury car rivals more closely than ever before and reflect the fundamental changes sweeping the industry.

The German manufacturers are exploring options such as joint vehicle platforms, batteries and autonomous car technology, according to people familiar with the matter, who asked not to be identified because the discussions are private.

Collaboration would be restricted to technology that is not brand-specific, but deliberations are in the early stages and the timing of any decisions is unclear, the people said. Daimler and BMW declined to comment.

Under pressure to invest in self-driving electric cars, carmakers are increasingly reaching out to competitors in an effort to cut costs.

Volkswagen is in negotiations with Ford Motor to cooperate on vans and potentially autonomous vehicles.

Partnerships are also a way to become more agile in the race to dominate digital services such as ride-hailing, to counter cash-rich technology giants like Alphabet.

Strains have been evident and Mercedes-Benz parent Daimler and BMW have both cut profit targets this year, blaming trade tensions as well as rising development investments.

Daimler is adding a suite of 10 electric vehicles over the next four years, while BMW said it would offer 12 battery-only models by 2025.

Joining forces on automotive technology would significantly deepen Daimler and BMW's existing cooperation efforts.

The German manufacturers already work on components purchasing and bought digital mapping company Here Technologies for €2.5 billion (S$3.9 billion) in 2015, together with Volkswagen's Audi. This year, the pair agreed to combine their respective car-sharing platforms Car2Go and DriveNow.

The German manufacturers already work on components purchasing and bought digital mapping company Here Technologies for €2.5 billion (S$3.9 billion) in 2015, together with Volkswagen's Audi. This year, the pair agreed to combine their respective car-sharing platforms Car2Go and DriveNow - a deal that received regulatory approval in the United States on Wednesday.

The merger of their mobility operations includes plans to add other services and has boosted prospects for more initiatives, the sources said. Relations had soured last year after allegations surfaced that German car manufacturers had potentially breached cartel rules in Europe.

The ongoing probe into suspected collusion between BMW, Daimler and Volkswagen may complicate new cooperation projects, one of the people said.

Given the complex nature of product and technology cycles, the eventual payoff from a partnership could take years to realise, the sources added. Building new cars can involve decade-long planning, making cooperation very difficult.

 
 

In 2013, General Motors sold its stake in PSA Group after failing to find savings through joint purchasing and product development, while an alliance of Volkswagen and Suzuki Motor broke down in 2016.

BMW works with Toyota Motor to jointly make the Z4 and Supra sports cars, as well as conduct research on hydrogen cars.

Daimler, meanwhile, has a cross share-holding with Renault and Nissan Motor involving engine sharing and joint vehicle production.

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A version of this article appeared in the print edition of The Straits Times on December 21, 2018, with the headline 'BMW, Daimler eyeing tie-up to make key car components'. Print Edition | Subscribe