A surge in demand for luxury cars and a doubling of sales in China has helped the German car-maker BMW to return to profit in the first three months of the year.
The group, which owns the Mini and Rolls-Royce marques, reported net profits of €324m (£276m) for the first quarter yesterday, against a loss of €152m in the same period in 2009. The group, which ranks as the world's biggest upmarket car brand, said it delivered more than 315,000 new cars in the first three months of the year, an increase of 14 per cent. Revenues were up 8 per cent, on a constant currency basis, at €12.4bn.
"The BMW group has made a good start to 2010. We increased earnings significantly in the first quarter and are now back on a growth course on almost all car markets," said Norbert Reithofer, BMW's chairman, who added that the company is "well on its way" to hitting its annual targets.
"We are aiming to achieve significantly higher group earnings in 2010 than in 2009, thus making a tangible step towards achieving the targets we have set for 2012," he said.
BMW is looking to cut spending on supplies and components by €4bn over the next two years, which it hopes to achieve partly by pooling various purchasing projects with Daimler's Mercedes Benz. The group is also targeting an Ebit (earnings before interest and tax) margin for its automobiles segment of 8 to 10 per cent.
Despite the upbeat results, European markets were the company's softest during the period. Sales increased by 4.4 per cent across the Continent, compared with a 7.5 per cent jump in the United States and a huge 55.7 per cent gain in Asia. In China, BMW reported the sale of 36,607 of cars, an increase of 100.5 per cent on first quarter sales last year.
Overall sales were helped by a 54 per cent surge in sales of BMW's 7-Series range. The car shares about 70 per cent of its parts with the revamped version of the cheaper 5-Series, which went on sale in March in Europe.
Yesterday's figures will come as a huge relief to the company, and to the wider luxury car market, which was dealt a body blow during the recession. "It's good news that [BMW was] able to beat expectations given the runout of the 5-Series," said Mike Tyndall, an analyst at Nomura. "Listening to Mercedes and Audi, it appears pricing pressure has eased somewhat."
There is terrific competition in the upmarket car sector. Audi has said it is planning to replace BMW as the biggest group in the industry by 2015.
BMW also showed that it has been able to restore prices after the downturn, and clear out stocks of the old 5-Series at higher than expected prices. "They are massively restoring pricing. Just from the latest monthly data, their discounts per unit in the US are now 31 per cent below the same level of last year, and this is even before the new 5-Series hits the US," said Credit Suisse's analyst, Arndt Ellinghorst.
In what will be seen as a fillip for its UK arm, the sale of Minis increased by 13.6 per cent, with the group saying that it expects additional sales towards the end of the year when its "Mini Countryman" goes on sale. The Rolls-Royce brand recorded its best first-quarter sales volume performance to date, with sales up by 60.3 per cent to 279 vehicles. BMW described sales of 158 of the new Rolls-Royce Ghost as "extremely successful".
Several versions of the Mini are manufactured at BMW's plant in Oxford, while Rolls-Royce has a factory at Goodwood in West Sussex.Reuse content