China pushes BMW to record sales, earnings in Q3
FRANKFURT, Germany (AP) -- Strong sales of its luxury cars in China helped luxury carmarker BMW AG overcome weak markets in Europe due to the debt and economic crisis there.
Net profit rose 16 percent in the third quarter to (euro) 1.29 billion ($1.65 billion). Sales jumped 13.7 percent to a record (euro) 18.82 billion.
The company said Tuesday it was sticking to its earnings forecasts for 2012 sales and earnings that are better than the previous year's. Still, it warned of "an increasingly uncertain market environment."
CEO Norbert Reithofer called it a "good third quarter" but added that in the fourth quarter the company and the auto sector as a whole "are likely to be confronted with adverse business conditions."
Booming Asian sales helped the maker of the X5 sport utility vehicle and the 5-series sedan overcome a stagnant market in Europe. China sales rose 30 percent, while European sales grew modestly at only 2.6 percent as sales sagged in southern Europe where the economic crisis is at its worst.
Sales were even down slightly, by 0.5 percent, in BMW's home market of Germany.
Having a strong presence in three key regions -- Asia and the United States as well as Europe -- has helped protect Munich-based BMW from a very difficult European car market. Slack demand has forced European plant closings by mass-market carmaker Ford Motor Co. while others such as GM's Opel are looking to also cut factory capacity. BMW however focuses in the more recession-resistant luxury end of the market, where profits per vehicle are higher.
The company said the third quarter profits were helped by a strong model mix -- meaning sales are up in the more profitable parts of its model range. For the first nine months of the year, sales of its X3 SUV, produced in Spartanburg, South Carolina, rose 28.7 percent while those for its 5-series larger sedan increased by 5.3 percent.
Demand for autos has weakened in Europe as countries such as Spain and Italy try to cut government spending and reduce heavy levels of debt. Greece is in a profound recession and remains on financial life support from other eurozone countries and the International Monetary Fund so it can continue to pay its debts. Ireland, Portugal and Cyprus have also needed financial rescues. Government cutbacks and recessions with high unemployment are leaving people fearful and with less to spend.
The eurozone economy shrank 0.2 percent in the second quarter and output could fall again when third quarter figures come out next week, while forecasts for next year are flat as well.
(Copyright 2012 by The Associated Press. All Rights Reserved.)