Why BMW Is No Longer The Leader In Luxury Sales

BMW’s new CEO helped drive a 33% increase in Q3 operating profit thanks to higher sales of sport utility vehicles and the absence of singularities that weighed profit a year earlier..

Oliver Zipse, who took over as CEO in August, said the German sports car maker is on track to meet its announced targets for the year, as opposed to rivals such as Ford, which have been forced to lower their profit forecasts due to slowing sales in China..

«we, generally, on the way to achieving our goals for the year», – Zipse said on Wednesday.

BMW passenger car sales are up 3.6% in the quarter, including a 5.8% rise in China in September thanks to the recently launched X3 sports utility vehicle, despite overall Chinese car sales have fallen for the past 15 consecutive months..

BMW said its earnings before interest and taxes rose to 2.29 billion euros ($ 2.54 billion), up from 1.72 billion euros the previous year, beating a forecast of 2.16 billion euros in a Refinitiv poll..

Revenues represent «first positive signal after several disappointing quarters», – noted Jürgen Pieper, analyst at Bankhaus Metzler.

BMW is developing a cost-cutting program that aims to save more than € 12 billion ($ 13.3 billion) to fund the development of electric vehicles and digital features such as automated driving. The relevance of these measures is evident against the backdrop of declining vehicle sales in key markets such as Europe and China and rising investment costs..

Strong SUV Sales Help BMW Increase Profits

«The efficiency measures we have taken are paying off, CFO Nicholas Peter said in a statement. – Nevertheless, we strive to achieve more».

Interest in electric vehicles is gaining momentum. Production of an electric Mini will begin this month, followed by the BMW iX3 next year. The company is trying to comply with stricter environmental regulations that will come into force next year in Europe, which will impose tough fines on automakers whose average emissions exceed 95 grams of carbon dioxide per kilometer..

With tightening regulatory pressures and declining demand in key markets, automakers are looking to cut costs. Ford Motor Co. cut its forecast by a year in October, while Volkswagen AG CFO Frank Witter warned last week that the next two years will be challenging.

«The car of the future, with all its integrated digital functions, is a high-tech product, the complexity of which is still underestimated.», – declares Oliver Zipse.

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