BMW has seen a sevenfold increase in second quarter profits due to strong sales in Asia and the US. Despite the slump in Europe's market - and summer coming to an end - analysts predict BMW can keep up the good work.
German car exporters have seen a significant rise in overseas sales with Munich's luxury automaker BMW leading the pack, according to figures released Tuesday.
The association of German automakers (VDA) said Tuesday that German automakers exported 312,400 cars in July, clinching a 6 percent increase over the same month in 2009. For the first seven months of 2010, total car exports were up 39 percent to nearly 2.5 million automobiles.
BMW placed itself solidly ahead of Audi and Mercedes, with a sevenfold year-on-year profit increase. The company posted a second quarter net profit of 834 million euros ($1.1 billion), compared with 121 million euros for the same period in 2009. In the United States alone, the group's July sales hit 21,253 automobiles, increasing BMW's US sales by 10.1 percent over last July.
BMW's results shattered the predictions of a Dow Jones Newswires poll, which had forecast profits of 674 million euros.
Meanwhile, Daimler, which owns Mercedes Benz, has raised its core earnings predictions to six billion euros for 2010. Europe's biggest car maker and Audi parent group, Volkswagen, plans to sell a record 6.3 million vehicles.
BMW claims improved construction
Meanwhile, Friedrich Eichiner, BMW's chief financial officer, credited the company's success to improved construction. The introduction of a new modular construction system, BMW CEO Norbert Reithofer said, would also increase BMW's profits with every new model to come.
The luxury automaker produced cars in 2010 that were more expensive than any models it had produced since November 2007, and DZ Bank's auto expert, Jaski Terzic, predicted that the automaker's new 5 series and its Countryman mini-SUVs would promise high profits for the second two quarters as well.
A falling euro equals rising sales
In recent months, European automakers have benefited from the euro's fall in value against the dollar, according to automotive professor Willi Dietz from Germany's IFA automotive economic institute. The tumbling euro "greatly improves their situation in most of the Asian and North American markets," Dietz said.
Yet, while Asian and American markets have boomed, European markets have cooled down. New car sales in France, Italy and Spain fell sharply in July, and the US market is expected to slow as summer comes to an end.
"We cannot say this will last for the next 12 months," Dietz told the AFP news agency.
New car registrations in Germany itself have slumped since a government car-scrapping program to boost recession sales came to an end. They were down 30 percentm, with 237,500 cars sold in July.
Author: David Levitz (AP/AFP/dpa)
Editor: Martin Kuebler