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BMW Sees Big Year Ahead

But there are big risks ahead.

by on Mar.14, 2012

One of many new models: the 6-Series Grand Coupe is BMW's first-ever 4-door coupe.

The BMW Group is looking beyond the threat of a steep recession in Europe and is predicting another record year in 2012.

Global growth, from the recovering U.S. market to the boom in luxury demand in emerging markets like China, Russia and Brazil should play a big role in the year ahead, according to the Bavarian maker’s chief executive.  Significantly, BMW ended 2011 as the number one luxury maker in the still-critical American market, the first time it has ever beaten all comers, including Mercedes-Benz and Lexus.

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“We are targeting new highs in sales volume and pre-tax earnings for 2012”, stated Norbert Reithofer, Chairman of the Board of Management of BMW AG at the Annual Accounts Press Conference in Munich on Tuesday.

The automotive segment remains on course to achieve an earnings-before-interest-and-taxes, or EBIT, margin of between eight and 10%, Reithofer predicted.

He added that if the global economic climate does not take a turn for the worse, the BMW Group forecasts an EBIT margin in 2012 for the automotive segment at the upper end of the range.

“We are starting the new year with a full order book and a highly attractive model range. The BMW Group plans to grow faster than the market as a whole in 2012 and expects to achieve new sales volume records for its BMW, MINI and Rolls-Royce brands” continued Reithofer.

One important driver for growth will be the new BMW 3 Series, the sedan version of which has been available worldwide since early last month.

Other new and revised models will also be launched in 2012, including the BMW 6 Series Gran Coupé– the first four-door coupé in the company’s history – which comes to market in June, and the upcoming revision of the group’s flagship, the BMW 7 Series, which rolls out in July.

“Premium is and remains our business model and the basis for the BMW Group’s future success. In terms of innovation, design, sustainability and efficiency, our vehicles will continue to set standards in the premium segment”, emphasized Reithofer.

Profitable growth will be achieved by launching new products in all vehicle segments and by engaging in new markets, he stressed.

“We are targeting a worldwide sales volume of more than two million vehicles in 2016 and hence significantly earlier than originally planned for 2020”, stated Reithofer.

The optimistic forecast by BMW’s CEO was generally well received, analyst Jochen Gehrke, of Deutsche Bank, responding, “the profit outlook…matches our expectations.”

Spending on new technologies and programs meant to expand the BMW production network will rise in the coming years, however.  And it remains to be seen how the market will respond to some of the Bavarian maker’s more radical efforts.

Among the most risky, analysts caution, is the new “i” series of battery-based vehicles. Starting off with the i3 battery-electric city car and i8 plug-in hybrid sports car, the new brand-within-a-brand could position BMW as a leader in the emerging market for alternative powertrains.  But the slow sales of such vehicles in 2011 only emphasize the risk the maker will face when the new division debuts in the coming year.

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