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BMW in the fast lane

March 18, 2015

German auto maker BMW has reported decent pre-tax earnings, consolidating its top position in the premium car market. The company said volatile markets would not keep it from pushing for record sales this year.

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BMW logo Photo: Matthias Schrader
Image: picture alliance/AP Photo

BMW reported Wednesday its pre-tax profit surged by more than 10 percent to 8.7 billion euros ($9.2 billion) in 2014.

Outgoing CEO Norbert Reithofer said car markets in many parts of the world were expected to expand further. He warned, though, that geopolitical tensions, price pressures, rising staff costs as well as heavy investment in new technologies were bound to have an impact on the firm's earnings in the current year.

"Nonetheless, we're aiming for new sales and pre-tax earnings records in 2015," Reithofer told reporters in Munich.

Keeping a close eye on competitors

His successor, Harald Krüger, who will take over in May, will face the daunting task of strengthening the carmaker's position in China's increasingly cooling automobile market.

Fifteen new or revised models are to help do just that and ensure unit sales of over 2 million this year globally, thus keeping domestic rivals Audi and Mercedes at arm's length.

Going Electric - Fated to Fail?

Some auto experts have started wondering, however, whether the old "sales grow - profits look after themselves" formula will work forever.

"There's an obsession with volume growth in the German premium segment and this needs to come to an end," Evercore ISI researcher Arndt Ellinghorst argued. "Otherwise it'll become a negative spiral of discounting, eroding brand equity."

hg/ng (dpa, Reuters)