BMW sees strong profit gains on new models

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Christoph Rauwald Frankfurt

BMW, the biggest maker of luxury cars, has forecast “significant” gains in profit this year as new models like the 4-Series Gran Coupé and i8 sports car propel record deliveries.

Pretax profit this year would beat last year’s e7.91 billion (R118.3bn), lifted by 16 new and refreshed models and lower development spending, the Munich-based company said yesterday.

Sales gains should be stronger in the second half, helping BMW maintain its status as the best-selling upscale car brand. The shares gained the most in more than three years in intraday trade.

“BMW gave a surprisingly positive outlook,” said Juergen Pieper at Bankhaus Metzler, who recommends buying the shares. “They seem to be getting out of a phase of stagnation quicker than expected.”

Competition among Germany luxury car makers is heating up as Volkswagen’s Audi division, which ranks second in the segment on an annual basis, outsold BMW’s namesake brand in the first two months of this year. Daimler’s Mercedes-Benz, which holds third place, has boosted deliveries faster than the two larger rivals in recent months. BMW is not giving up.

“We will remain the leading premium car company” this year, chief executive Norbert Reithofer said at BMW’s headquarters in Munich yesterday. “We remain very confident about the business year 2014,” with sales volumes set for a “significant increase”.

The shares rose as much as 7 percent to e86.40, the biggest gain since July 13 2010, and were up 6.8 percent at 11.21am in Frankfurt trading. The stock has climbed 25 percent over the past 12 months, valuing the company at e55.1bn.

BMW has ramped up spending in recent years to fend off Audi and Mercedes, which both plan to take the luxury sales crown by the end of the decade. The three German manufacturers are also facing a challenge from expansion by smaller producers of upscale vehicles, including Tata Motors’s Jaguar Land Rover and Fiat’s Maserati. – Bloomberg


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