Key Takeaways
- The updated terms take effect December 1, 2026. BMW suppliers should assess how the revised terms affect their contractual obligations and whether their current operations comply with the new requirements.
- Core commercial terms remain largely unchanged, but compliance obligations expand. The update does not materially worsen key provisions involving price, warranty duration, or damages for late or missed deliveries. However, it introduces potentially significant obligations related to cybersecurity, export controls, sanctions, audits, and supply-chain governance.
- Suppliers should review existing contracts and consider how to respond. BMW has not announced whether the updated terms will apply to existing purchase orders, so suppliers may want to consider objecting to any unilateral application of the terms without a commercial negotiation.
BMW Group International (“BMW”) has announced updates to its standard Terms and Conditions for the Purchase of Production Materials and Automotive Components (“IPC”) that will take effect December 1, 2026. The IPC forms the foundational terms that apply to Purchase Orders, and many other contracts, issued by BMW. Therefore, it is critical that suppliers or prospective suppliers to BMW understand the obligations provided for in the IPC and how BMW is proposing to change those obligations in its most recent update.
The changes proposed by BMW in the updated IPC are not as drastic as changes that have been proposed by certain other OEM’s in past years. Notably, the proposed update does not materially worsen for suppliers most critical terms, such as price, warranty duration, or damages for late/missed deliveries. However, the proposed changes include a number of material changes that may increase supplier’s obligations regarding issues such as cybersecurity, export control, sanctions, audits, and supply-chain governance. Such changes are likely to impose an increased burden (and cost) on many suppliers for administering the contract and their related operations. Failure to comply with these new obligations may result in potentially new, or increased, liability and exposure for breach of contract and indemnity.
A table summarizing the notable changes in the updated IPC is included at the end of this article. Suppliers should consider carefully how these changes may impact their own obligations and the extent to which their current operations are, or are not, already compliant with any of the requested changes. What may be lower risk for most suppliers could present a higher risk for others – and vice versa.
BMW has not yet announced whether it will seek to apply the terms to existing purchase orders, or whether the updated terms will apply only to new purchase orders issued after the effective date. However, suppliers that have existing contracts with BMW may wish to consider preemptively objecting to any unilateral effort by BMW to apply the terms to existing contracts absent a commercial negotiation that includes issues important to the supplier.
The authors of this article, and the dedicated attorneys of the Foley & Lardner LLP automotive team, stand ready to assist any suppliers that may need assistance with understanding how the changes to these terms may impact them, and how best to navigate or object to these changes.
Summary of Changes to IPC
| Clause | 2022 IPC | 2026 IPC | Change Summary | Risk / Implications |
| Definition – Affiliated Company | “under joint control” | “under common control” | Minor wording change. | Likely no material change. |
| Definition – Goods | “software” | “software components” | Clarifies Goods include software components. | Could support broader application of software/cyber obligations to embedded or modular software. |
| Definition – Incoterms | “Incoterms 2010” | “commercial trade terms published by ICC” | Reference no longer tied to 2010 version. | Potential ambiguity as to which Incoterms version applies if not specified in contract. Worth clarifying in transaction documents. |
| Definition– In writing | Included text form, fax, email, EDI | Includes telecom transmission and BMW electronic systems unless stricter form required | Expands accepted communication methods. | May make electronic communications more readily binding. Internal contract controls should be careful. |
| Definition – Project Period | “delivery obligation of spare parts” | “supply obligation of spare parts” | Wording update only. | No major impact. |
| 1.1 | “Purchase Terms and Conditions” | “Purchasing Conditions” | Renaming only. | No material impact. |
| 1.3 | BMW standards via B2B Portal > TEREG | B2B Portal > TEREGNEXT or BMW-specified application | BMW can shift applicable standards to updated portals/applications. | Operational risk: supplier must monitor updated BMW platforms and standards continuously. |
| 1.4 | BMW review/failure to request docs does not waive obligations or imply consent | BMW review/request or failure to review/request does not waive obligations or imply approval | No-waiver language broadened and clarified. | Slightly strengthens BMW’s ability to deny any reliance on document review/acceptance. |
| 1.5 | Notice of change to BMW email + purchasing departments | Notice to relevant purchasing department(s) | Administrative update. | Lower clarity on formal notice channel; keep evidence of delivery. |
| 2.1 | BMW may “object” to PO not accepted/performed within 14 workdays | BMW may “revoke” PO | Terminology tightened. | Slightly cleaner termination/revocation right for BMW; modest supplier risk. |
| 2.2 | Inconsistency: Supply Contract prevails over IPC and Long-term Supply Contract | Inconsistency: Supply Contract prevails over Purchasing Conditions | Long-term Supply Contract dropped from explicit priority sentence. | Drafting ambiguity on hierarchy between Supply Contract and Long-term Supply Contract. Worth clarification. |
| 2.4 | Seller must immediately inform Buyer if change increases/reduces costs or moves delivery date | Seller must immediately inform Buyer and set out and justify such effects in detail | Burden of substantiating change impacts increased. | Higher evidentiary burden for supplier to preserve price/time adjustment claims. Important commercially. |
| 2.5 | Seller cannot make changes without Buyer’s prior written consent | Same, plus Seller must ensure obligation is passed on along supply chain | New express flow-down obligation. | Material increase in supply-chain governance burden; breach risk if lower tiers change process/spec/location without proper controls. |
| 2.6 | Extraordinary termination grounds | Same grounds, but cross-reference later says termination “in accordance with this Clause 2.5” | Likely drafting error in 2026. | Ambiguity; advisable to seek clarification/correction. |
| 3.5 | Delivery breach damages incl. lost profit/lost contribution margin | Same | No substantive change. | No major new risk. |
| 3.6 | Force majeure = event beyond reasonable control, cannot be averted/foreseen with utmost care | Similar, but “shall be deemed to be any event beyond the control…” | Minor wording refinement. | No material change. |
| 4.2 | EDI implementation guideline location specifically referenced | Broader logistics reference | Admin update. | Low. |
| 4.5(b) | Seller’s readiness notification contents listed | Same, wording refined | No real change. | Low. |
| 4.5(c) | Seller shall grant carrier access | “The Seller shall grant…” | No real change. | Low. |
| 4.5(d) | No equivalent express rule | Seller is consignor/shipper of Goods under dangerous goods regulations; Incoterms unaffected | New substantive dangerous goods allocation. | Significant for suppliers shipping hazardous goods. May increase regulatory responsibility, documentation burden, and liability exposure. Candidate for clarification/negotiation. |
| 4.5(e) | Seller bears extra transport-process costs caused by incorrect/incomplete dispatch readiness notice or other breaches | Same | No material change. | Low. |
| 6 | Incoming inspection per IATF 16949 | IATF 16949 or successor/replacement standard | Automatic future-proofing. | Could automatically incorporate future standards without re-negotiation. |
| 7.1 | BMW eInvoicing via eDocument Portal eInvoice | BMW eInvoicing via eDocument Portal or BMW-specified application | More flexible platform wording. | Operational only. |
| 7.5 | Payment period wording | Same substance, formatting split across pages | No substantive change. | No major risk. |
| 8.1(c) | Further official/accredited docs required for intended use/type approval/product conformity | Same, with slight wording refinement | No major change. | Low to moderate documentation burden remains. |
| 8.2 | Seller to provide non-preferential/preferential origin info via CALLISTO or in writing | Seller must provide origin info and, at Buyer’s request, supporting proof documents (e.g. certificate of origin / chamber of commerce declaration) | Documentary burden expanded. | Moderate increase in customs/admin burden; may be difficult in complex global supply chains. |
| 8.3 | Customs suspensions/punitive tariffs, origin investigations, customs procedures, etc. | Same | No major substantive change. | Continues high customs cooperation burden. |
| 8.4 | Seller to contact Buyer’s customs department directly | Contact via relevant purchasing department; import clearance assumption requires Buyer customs department prior written approval | Approval path clarified/tightened. | Operational risk if customs issues are not routed correctly. |
| 8.5 | Supply chain security evidence/certificates/declarations upon request; support audits | Supporting documents must be sent in PDF via B2B portal before conclusion of contract; Seller must notify if docs expire, are revoked, or lost | Pre-contract and ongoing certification/document maintenance obligation strengthened. | Moderate increase in compliance burden and potential pre-contract gating risk. |
| 8.6 | Notify export restrictions; US law licenses; relevant classification numbers; exemptions | Expanded to include US/CN/EC licensing regimes, broader classification references, duty to notify if Seller, affiliate, or Subcontractor is on a sanctions list, and provide contract-performance documents on request | Major expansion of export control/sanctions obligations. | High risk. Extends compliance and disclosure duties across affiliate/subcontractor network; potential breach/termination trigger; needs careful review and likely clarification. |
| 9.2 | PPA required for first supply, new part number, or process modification | Adds PPA also for AI change / change index change | Approval trigger broadened. | More approval events, more administrative burden, possible delay risk. |
| 9.6 | Seller must bind Subcontractors to Clauses 9.2–9.6 and 9.8 sentence 1 | Seller must bind Subcontractors to Clauses 9.2–9.6 and 9.8 sentence 2 | Flow-down reference adjusted. | Need to verify precise sentence reference; may affect scope of required subcontractor commitments. |
| 9.8 | Seller to inform BMW about supply chain to reasonable extent upon request; immediate notice of relocation or supply-chain changes | Immediate notice of any changes in supply chain, including relocation within supply chain or any change of Subcontractor | Notice obligation broadened and made more explicit. | High operational burden if read literally; should be clarified to material changes/direct subcontractors only. |
| 9.9 | PSCO designated in Supplier Database | Supplier Database or BMW-specified application | Admin update. | Low. |
| 10.1 | Goods suitable for intended use under Supply Contract | Goods suitable for intended use under Long-term Supply Contract or Supply Contract | Potential expansion of conformity benchmark. | Moderate risk if long-term agreement contains broader specs/expectations than PO or individual supply contract. |
| 10.2–10.5 | Warranty period and remedies | Substantially same | No major change. | Consistent with initial commercial impression. |
| 11.1–11.8 | Liability, indemnity, recall, antitrust damages | Substantially same | No major substantive change. | Core exposure broadly unchanged, but easier breach scenarios exist via expanded compliance/security duties elsewhere. |
| 12.3 | No publication through marketing or otherwise without consent | No publication through marketing, communication, or otherwise; additional BMW portal reference | Slightly expanded publicity restriction. | Low; may require review of PR/customer reference practices. |
| 13.2 | Tooling obligations | Same substance | No material change. | Low. |
| 14.1 | Spare parts supply for 15 years post-EOP; then Classic Supply proposals | Same, but 15-year period defined as “Spare Parts Supply Period” | Mostly definitional. | Low. |
| 14.3 | Buyer may purchase Goods used as spare parts directly from Subcontractors/third parties | Buyer may purchase Goods used as spare parts and parts of such Goods directly from Subcontractors/third parties | Buyer sourcing flexibility expanded. | Moderate aftermarket/commercial control risk for supplier. |
| 15.1 | IP indemnity and carve-out | Same substance | No material change. | Low. |
| 15.1 limitation sentence | “Claims … against the contractor” time-barred | “Claims … against the Seller” time-barred | Clarification only. | Low. |
| 15.2 | BMW Group is free to select own legal representative, subject to Seller consent not unreasonably withheld | BMW Group may select own legal representative, subject to same consent standard | Small wording softening/clarification. | No major impact. |
| 16 | Seller must comply with EDI implementation guidelines | Same, plus portal location stated | Admin update. | Low. |
| 17.1 | Software must not contain features detectable under state of art that endanger integrity, trustworthiness, availability; no unwanted transmission/manipulation/feature expansion | Adds vulnerabilities, adds authenticity, wording modernized | Cybersecurity standard broadened materially. | High risk. Seller may face claims for reasonably detectable vulnerabilities, not just hidden/undesired features. |
| 17.2 | Seller secures Buyer’s Data and own necessary Data; state-of-art measures; proof on request; segregation; restoration capability | During Project Period seller must secure BMW Group data and comply with applicable information security regulations incl. NIS2, EU AI Act, EU Cyber Resilience Act; Buyer may specify requirements | Major expansion of legal and technical security obligations. | High risk. Potentially open-ended compliance burden, especially for software/digital suppliers; should be limited to actually applicable laws and reasonable written BMW requirements. |
| 17.3 | Buyer may require appropriate security level and proof, in particular ISO/IEC 27001 or TISAX | Seller must provide evidence upon request; examples include ISO/IEC 27001, ISO/SAE 21434, ISO 22301, TISAX | Certification/evidence framework broadened. | Moderate to high implementation burden; may require more mature ISMS/BCM/cyber governance. |
| 17.4 | No damage-causing software; check in accordance with state of art; confirm on request | Adds vulnerabilities, requires checks regularly | Ongoing monitoring/testing duty strengthened. | High. Requires continuous cyber hygiene, not just one-time assurance. |
| 17.5 | Incident obligations: notify BMW, mitigate, support reconnection/recovery, provide IOC/TTP/closure report and security report on request | Adds examples like data misuse, requires root cause analysis, report to include results of security checks | Incident response obligation expanded in detail. | High. Increased post-incident burden and documentation exposure. |
| 17.6 | Notify contact person via Supplier Database | Supplier Database or BMW-specified app | Admin update. | Low. |
| 17.8 | Audit rights for information security, with external auditor allowed if not Competitor | Same | No major change in clause itself. | Combined with expanded 21.5 audit rights, overall security audit exposure is higher. |
| 18.1–18.4 | Confidentiality scope and exceptions | Largely same | No major change. | Low. |
| 18.5 | Prior notice of compelled disclosure “in writing or in text form” | Prior notice must be in writing | Formality tightened. | Low to moderate; less flexibility in urgent disclosure situations. |
| 18.6 | Confidentiality survives 3 years after end of last Supply Contract | Confidentiality survives 3 years after end of Project Period | Survival period potentially extended significantly. | Moderate increase in duration of confidentiality obligations, especially for long-lifecycle automotive programs. |
| 19 | Insurance | Same | No material change. | Low. |
| 20.2 | Compliance with antitrust, anti-corruption, AML, export control, data protection; compliance with BMW Group Supplier Code of Conduct | Adds compliance with AI regulation and sanctions; requires compliance with EU/UN/USA/China export control and sanctions laws regardless of territorial/personal applicability; remedial measures if local law conflict; replaces code with VDA Code of Conduct for Business Partners | Major expansion of compliance burden and possible conflict-of-laws exposure. | Very high risk. This is one of the key clauses to challenge/clarify. Extraterritorial sanctions/export-control obligation may be impossible or conflict with local law. |
| 20.3(a) | Resource efficiency data as required by BMW Group Supplier Code of Conduct | Resource efficiency data as required by BMW Group | Source document reference changed. | Likely low, but BMW retains broad ESG data request rights. |
| 20.3(f) | GS 93008 (1 to 4) “Substances of concern”; subparts include REACh, IMDS, SDS, dangerous goods safety info, radioactivity | GS 93008 (1, 2 and 4); some content restructured; IMDS moved to new 20.3(g) | Restructured rather than clearly relaxed. | Need to verify no substantive omission in final text. Overall burden remains significant. |
| 20.3(g) | IMDS obligation was under 20.3(f)(ii) | IMDS obligation moved to standalone subclause | Structural only. | Low. |
| 20.4–20.7 | Data transfer warranty, subcontractor responsibility, compliance function, right to refuse performance if law violated | Same | No material change. | Low to moderate ongoing compliance burden remains. |
| 21.1 | Amendment/waiver effective only if in writing and signed by both parties | Amendment/waiver effective only if in writing; explicit signature requirement removed | Formality arguably softened. | Mixed effect. Could allow more communications to qualify as binding written changes; internal approval discipline important. |
| 21.5 | Buyer may access Seller premises on 48h notice to inspect records, instruments, books, records, Goods, manufacturing process; remote/hybrid audit possible | Buyer or third party appointed by Buyer may access; audit scope expressly includes maintenance of manufacturing process incl. loss prevention, fire protection, information protection | Audit rights broadened substantively. | High. More intrusive operational and resilience-related audit exposure; worth clarifying scope, frequency, confidentiality, and protocols. |
| 21.7 | Financial information obligation | Same, minor wording updates | No material change. | Low. |
| 21.8 | Non-financial reporting | Same, minor wording updates | No material change. | Low. |
| 22.1 | Governed by laws of Buyer’s principal place of business | Governed by substantive law of Buyer’s principal place of business | Clarification only. | Low. |
| 22.2 | Exclusive jurisdiction; antitrust carve-out; waiver of jury trial | Same, but one sentence on consensual waiver removed while full jury waiver retained | No meaningful change. | Low. |
| 22.3 | Product liability / IP forum recourse | Same | No material change. | Low. |
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