BMW will rely more on suppliers to develop systems and modules as it prepares a major new-model offensive.
In the next six years, BMW plans to spend $8.8 billion for product development.
During that period, BMW will introduce 20 models and three engine ranges.
"We don't have the capability to make all these models (by ourselves)," said purchasing boss Gerhard Schuff.
A limited number of suppliers are responsible for most systems development for some new BMW models. For less technically sophisticated models, BMW uses systems suppliers to integrate and develop modules.
For example, BMW plans to use more modules for its 1-series small car to shorten its assembly line and reduce product variation. The 1 series is due in 2005.
Some module sub-assembly off the line is done by BMW itself.
BMW has decided to eliminate concept competitions between prospective suppliers for some niche vehicles because volumes are too low. Instead, BMW selects a supplier to develop a package of systems to meet specification targets for the entire vehicle.
BMW is taking the same approach to develop a few key major systems, such as the new ZF six-speed automatic transmission for the 7 series.
"It is not only component work but integration work, so partnership is very important," Schuff said.
But BMW will always select some Tier 2 suppliers, Schuff said. He said BMW wants to continue to work with lower tier and smaller suppliers across Europe.
"They have the right size," Schuff said. "BMW is tailor-made for these suppliers. They are very innovative, very dedicated."
But Schuff said the more innovation a car needs, the more BMW must lead the innovation.
"It depends a little on the technical level you require," he said.
Schuff wants suppliers to work on long-term quality because customers expect expensive cars to be as durable as expensive watches.