Slowing car sales in China and other emerging markets could help customers in the US obtaindiscounts at their local dealership.
BMW says carmakers have reallocated vehicles intended for China and other emergingmarkets to the US, increasing competition and leading to higher incentives.
Friedrich Eichiner, chief financial officer, said: “Competition is increasing in the US. The strongdollar is creating attractive market conditions. Every manufacturer wants a piece of the cake.”
Partly because of weaker pricing in the US and China, BMW’s automotive operating margindipped to 8.4 per cent in the second quarter. Although this was within BMW’s targeted rangeof 8-10 per cent, it missed the consensus forecast of 9.3 per cent and was substantially lowerthan the 10.5 per cent margin achieved by rival Mercedes-Benz in the same period.
In his first earnings update since taking over as chief executive, Harald KruegerreaffirmedBMW’s goal to achieve a pre-tax profit increase of between 5 and 9.9 per cent in 2015.
However, BMW cautioned that the increase would be tempered by fierce competition, risingpersonnel costs, high investments and the normalisation of the Chinese market.
Last year China accounted for 22 per cent of BMW’s sales, but is slowing due to the volatilestock market, a government crackdown on corruption and limits on new vehicle registrations.
BMW’s operating profit declined 3 per cent to 2.5bn in the second quarter, in line withforecasts. (www.chinainout.com)
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