BMW and Daimler looking to form purchasing alliance in U.S. and China

The saga between BMW and Daimler forming a strategic alliance dates back more than two years. To this day, nothing major has materialized except a deal over procurement and purchasing of common components, but there was hope that a resolution would be found after the surfacing of reports that the two German automotive groups were about to embark on a share swapping deal.

While the chances of the share swap have largely been nixed due to protests from BMW’s largest shareholder, the Quandt family, BMW and Daimler are likely to form a new cost-saving purchasing alliance to include car components sourced in North America and China.

Speaking with Automotive News, BMW’s head of purchasing, Herbert Diess, said the two companies have started to jointly purchase some common components for their European manufacturing operations. Diess also revealed that managers are still discussing joint purchasing in North America, where both carmakers have factories.

BMW is currently seeking suppliers for its next-generation X3 SUV, as well as the current X5 and X6 models. Daimler, meanwhile, needs suppliers for the Mercedes Benz M, R, and GL-Class models.

Diess also said the two companies have spent the past six months identifying components that can be purchased jointly. He did not disclose which specific components would be bought jointly but said they would include electronic and mechanical components.

In 2007, the idea of cooperation between BMW and Daimler was somewhat controversial, even to the companies' own spokespersons. At one point, Daimler even alleged that it had no interest in working with BMW. But times, and economic circumstances have changed. Leveraging the massed buying power of the two companies can help cut costs without affecting product quality in any way.

To muddy the waters even further, BMW is also in talks with Fiat but nothing has been confirmed yet.