Despite the major disruptions rocking the automotive world, the BMW Group is functioning well. Whether internationally or in Morocco, the company has succeeded in preventing the impact of a series of crises affecting the sector. The flexibility of supply, meticulous management of stocks… were the key words that allowed him to leave the game. Interview with Majdouline Chafai El Alaoui, who was a guest of ECO in May.
As soon as he tried to raise his head, after a pandemic that shook the global economy, the automobile sector found itself faced with two more unprecedented crises. First the lack of microprocessors, oh very important components for cars these days, then the Russia-Ukrainian conflict that shakes and disrupts both production and supply.
Ukraine and Russia are, in fact, important producers for the automobile industry. They provide him with some equipment needed for production, in particular wiring. “Russia is also a major producer of neon gas and palladium, where it provides almost 50% of world production,” explains Majdouline Chafai El Alaoui, director of the BMW and Mini brands at Smeia (exclusive importer of the brands) in Morocco). Speaking in the context of the new monthly ECO Inspirations meeting, our guest immediately reminds us that disruptions in the car market are not new. They originated in 2020, since the outbreak of the health crisis.
“This is, in fact, an unprecedented cycle of changes that the world economy has never experienced,” he laments. Clearly this has not neglected the automotive sector, which is now “facing some disruptions” that need to be overcome.
Exactly, for Chafai El Alaoui, “most brands, which manage to leave here, have shown flexibility through a variety of sources. This is the case with BMW”.
The company was able to record a 9% increase in sales in 2021 with 2.2 million vehicles produced in the context of a shortage of semiconductors. “The challenge is to find sourcing possibilities and have the flexibility in the production system to do well. This is what we have done within our organization”, assured the representative of the top management of BMW and Mini. And against all expectations, the year was positive for the brand, at the local level, with excellent performance in terms of sales due to a catch-up effect. It must be said that, as Chafai El Alaoui said, the group he represents is one of those “managing the semiconductor crisis best thanks to the flexibility of its production lines, direct interaction with producers, as well as also the diversity of its supplies. (hedging) of raw materials “.
As a reminder, BMW signed a cobalt supply contract with Moroccan mining company Managem Group in 2019. The contract, for a volume of 100 million euros, covers one -fifth of the group’s cobalt needs for manufacturing electrical batteries for five years. The company also found alternative solutions to maintain the same pace by finding new suppliers.
“The policy of the BMW group is to enter into direct agreements with suppliers of electronic chips”, emphasizes Chafai El Alaoui.
In this scenario, the least we can say is that more than the resistance was done by the BMW management in Morocco. By drawing as much as possible on its stocks, the importer-distributor saw that its sales exceeded its forecasts. “In 2021, we recorded a total of 3,397 sales for the BMW brand, while we only predicted 2,700,” he pointed out. Added to this were 188 sales of the Mini brand and 380 motorcycles of the Motorrad brand. Except that these beautiful performances were somewhat interrupted at the beginning of the year.
“For 2022, we find ourselves with low stock and in conjunction with some production disruptions at BMW, due to the international context, and this, like most European brands”, maintains Chafai El Alaoui.
However, the group maintained its forecasts for 2022, despite supply difficulties. “So we are expecting those to come at the local level, bigger than at the beginning of this year”, project director of BMW Morocco who announced that the speed of orders is intensive.
“Now, for a production to be done within two months, the order must arrive in Morocco in the next three or four months, depending on the source of the import,” he said. And in detail: “for European factories, about three months before the stock order. For American factories, you need four!”.
Consequently, it justifies the fact that the orders were made at the right time. “We adjust based on the stock situation, trends. We are always attentive to what is happening in the market and with our customers. These are very important indicators for the success of our orders placed with the manufacturer, “explains the ECO Guest.” This is how we were able to manage the effects of the crisis on Covid, “he added. And if the brand was able to exceeded its sales forecasts, largely thanks to its “order teams” who worked well this year.
“Our teams, along with the manufacturers, have succeeded in adjusting the orders according to the demands of our customers”, he rejoices. And to add: “you know, to succeed, you have to buy well. It’s not just based on price; it also means having the right product at the right time, having a product that meets demand, and above all is responsive. Dynamism and flexibility are the strengths that the automotive group must have these days. Flexibility is important. It makes a difference both nationally and internationally ”. Galloping inflation is also a factor that will affect or is already affecting the market.
“We expect an increase in the price of the vehicle in the national market, although it depends on the strategy of each brand and each importer,” said Chafai El Alaoui.
In the meantime, it noted an average increase of 2% in prices charged in 2021. Due to the lack of visibility, operators are certainly preparing for a bigger increase this year.
“Regarding the policy of Smeia and BMW, we have done our best to remain consistent with the expectations of Moroccan customers. We are not in a hurry to make price increases, we prefer to remain consistent”, the declaration representative of the BMW and Mini brands, who ruled that if “the situation in the world continues, we are obliged to pass on the share of price inflation.”.
One thing is certain, “we are doing everything we can to keep this inflation as low as possible. We don’t raise our prices in the same proportion of inflation. ”He assures that, for some models, everything is done to keep price levels intact. Rising inflation, added to a turbulent environment, is affecting margins. ”There was an apparent impact,” Chafai El Alaoui concludes.