BMW has posted lower first-quarter profitability than Mercedes as the luxury car maker’s growth in deliveries trailed its German rival.
BMW’s operating margin in the automotive division fell in the period to 9 per cent from 9.4 per cent a year earlier, the Munich-based manufacturer said onThursday. That compares with an increase at Mercedes, with the return on sales jumping to 9.8 per cent from 7 per cent.
BMW’s profitability is taking a hit as its ageing production line-up slows sales growth and forces the car maker to offer incentives to woo buyers. BMW’s first-quarter deliveries gained 5.2 per cent compared with a 16 per cent jump at Mercedes. BMW is banking on increased demand this year for the revamped 5-Series to counter Mercedes, which last year outsold its rival for the first time in a decade.
“The auto margin is where the question marks are – it’s still early days for the 5-Series,” said Stuart Pearson, a London-based analyst with Exane BNP Paribas, referring to a revamped version of BMW’s bread-and-butter saloon. “Generally in the auto industry, the environment for pricing has been negative.”
BMW pre-released key results on Thursday after earnings beat expectations in part due to one-off items such as a higher valuation for its stake in the HERE mapping consortium.
First-quarter earnings before interest and taxes rose 7.7 percent to €2.65 billion (Dh10.45bn), exceeding the €1.45bn average of three analyst estimates compiled by Bloomberg. The company stuck with a forecast for a “slight” rise in group profit before tax for the year. That figure jumped 27 per cent in the first quarter.
BMW’s better than expected earnings follow similar results at Volkswagen and Mercedes-Benz parent Daimler, which also released figures earlier than scheduled after car delivery growth and other gains helped profit beat estimates. At BMW, positive effects from special items amounted to at least €305 million, compared with €690m at Daimler.
BMW is scheduled to publish full quarterly figures on May 4.
* Bloomberg
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