Volkswagen may not have had much success with the retro New Beetle in Europe, but it’s a different story for BMW, with demand for the Mini pushing up the manufacturer’s first-quarter profit.
Volkswagen may not have had much success with the retro New Beetle in Europe, but it’s a different story for BMW, with demand for the Mini pushing up the manufacturer’s first-quarter profit.
The company’s net income rose to R5,8 billion, from R5,3 billion in the first quarter last year. This indicates that premium manufacturers are not faring badly in the tougher economic climate. Sales were up 14 per cent to R100 billion. By comparison, Volkswagen reported a 20 per cent decline of its first-quarter pre-tax profit.
Despite the better-than-expected earnings, BMW was being cautious about the second half of the year. “If the economic framework does not worsen unexpectedly, the company assumes it will increase further its unit sales, revenues and earnings,” BMW said.
Industry analysts, who had expected the manufacturer to post profits of R5,07 billion in the first three months, said they had underestimated the profitability of the new Mini.
BMW plans to bring out 20 new cars in the next six years, and incoming chief executive Helmut Panke, who is currently chief financial officer, has pledged to keep the company’s focus on premium cars.
It is bringing out a new version of its Z3 sports car this year, and is also developing a small car called the 1-Seris, as well as a sporty coupé, to be dubbed the 6-Series.
Current chief executive Joachim Milberg will retire for health reasons following next week’s shareholders’ meeting.
Meanwhile, reports that BMW is investing a further R750 million at its Mini plant near Oxford as it plans to expand production. This will create 700 new jobs. The Oxford facility has already produced 100 000 cars in the first 13 months since beginning production. Minis are scheduled to be on sale in a total of 50 countries by the end of this year.
BMW was conservative in its sales projections for the Mini, bearing in mind that the New Beetle did not do as well as expected.
But Norbert Reithofer, BMW’s board member for production, said: “customer reaction around the world has been astounding. People have been camping outside dealers in the US for a test-drive and showrooms in Japan had to be closed for a while.”