Daimler AG is working with BMW to develop a network of suppliers to support each of the brand’s forthcoming Mexico production facilities, according to a Reuters report. The report cites comments from Mercedes-Benz divisional board member for procurement and supplier quality, Klaus Zehender, and part of a wider effort by Mercedes to deepen its network of local suppliers, including at factories in China, South Africa, the United States and Mexico. “We have had the BMW cooperation for eight years and it is alive and well. We are looking at how to work together in Mexico. The potential cost savings are around 10%,” Zehender is quoted as saying, though he did not get into details regarding the extent of the potential cooperation agreement. He did, however, say that Mexico lacks an established network of suppliers for components suitable for premium vehicles. Generally, the Mercedes strategy is to make more components in overseas locations where it has a factory; as example, the launch of the new C-class includes a push to source 60% of the vehicle’s components locally. Zehender says that with future model generations, that number could increase to 80%. He is looking for current suppliers to expand overseas as one tactic. “We work intensively with 1,500 suppliers, the majority among them are willing to expand into the world. If one of them has qualms about international expansion, we tell them that this would have consequence that we have to build up a new competitor,” the executive said.
Significance: While both BMW and Mercedes have announced plans to begin production in Mexico, with Mercedes production expected begin in 2017 and BMW in 2019. Mercedes is forecast to build the CLA and the GLB in a joint project with Nissan’s Infiniti brand. BMW is planning capacity of 150,000 units per annum (upa), while the joint Mercedes and Infiniti plant will have capacity of 300,000 upa.
