Added by Erik West on November 3, 2011
BMW, the world’s largest manufacturer of luxury vehicles reported a 44% increase in its third quarter earnings on Thursday.
BMW reported earnings of €1.72bn (US$2.35bn), up from €1.19bn (US$1.64bn) the previous year. Profit increased to €1.08bn (US$1.47bn), up 23.8% compared to €874m (US$1.2bn) the previous year with based on total sales of €16.5bn.
BMW attributed the increases to its newer versions of the 1-series compact model, the 5-series sedan, and Mini Coupe. Sales of the popular 1-series cars are expected to continue boosting sales in the fourth quarter.
Sales increased by 21% in China, 19% in Asia, 10% in Germany, and 8% in North America. Sales of the midsize 3-series declined by 2.5% overall, yet the company said a new version is expected to be available within four months.
The company’s Chief Financial Officer, Fredrich Eichiner, said that the company is not expecting a recession even though the company’s earnings report said the global automobile market is showing signs of slackening.
Eichiner said that BMW is much better prepared for global financial uncertainty as compared to its level of preparedness in 2008; he said the company has a high cash reserve and can draw on lines of credit if necessary.
While analysts greeted the company’s earnings, saying they were excellent, Eichiner’s expectation that growth in China could be “a littiel more moderate” and that “there will no longer be two-digit growth rates as there have been in the past”, analysts question how the company and its competitors would fare with a downturn in China. One analyst estimated that China is the source of about 50% of the company’s operating earnings before interest and taxes with an average revenue per unit ranging between €55,000 and €60,000.