BMW AG expects little profit growth in the third quarter as it prepares for “the biggest product offensive in its history” over the next two years.
BMW AG expects little profit growth in the third quarter as it prepares for “the biggest product offensive in its history” over the next two years.
The Munich-based manufacturer will embark on a series of six new product launches over the coming 24 months, but has nonetheless said it is on track to post record revenues and profits in 2002.
BMW will offer its new Rolls-Royce from January, and is introducing a new version of its 5-Series saloon next year. The 1-Series subcompact, 6-Series coupé and X3 sports utility vehicle (SUV) are on its list of 2004 launches.
Germany’s third largest carmaker is expected to post a pre-tax profit of R6,9 billion for the three months to end-September on sales of R96 billion, reported on Monday.
“The company has made it very clear that essentially the second half of the year will be roughly flat, and we figure that their guidance is certainly right,” a US motor analyst said. “Sales have been very strong but they are at a very high stage of research and development spending at the moment because they have a lot of new products in the pipeline.”
Manufacturers of luxury vehicles, such as BMW and DaimlerChrysler, are more immune to economic fluctuations than many of their mass-market peers. BMW posted strong sales figures last month, propelled by the new Mini and booming demand from Britain.
Although some analysts are concerned that part of BMW’s product expansion involves a move into lower-margin small cars such as the 1-Series and the Mini – which it says could earn it a smaller profit margin than its BMW brand cars for the next seven years – others are convinced its strategy is sound.
“New product is actually the one defence a carmaker has against a falling market. When carmakers launch a new product they always set capacity below demand, which keeps pricing firm,” an analyst said. “It is just luck, but it couldn’t be a better time to be launching new cars.”
