BMW gives cautions profit forecast for 2015 after margin loss image

The German automaker, the world’s largest when it comes to sales of premium autos, hinted it may scale down efforts to further capture or protect existing market share in the near future.

The investors were also given a surprise and conservative view on the carmaker’s profit predictions for the year, after seeing the earnings margins squeezed in the last quarter of 2014. The Bavarian company has been the planet’s top-selling premium carmaker for almost a decade, but there are growing signs that holding on to the position comes with increased sacrifices – including slowing profit and eroding margins – as both Audi and Mercedes-Benz have increased the pressure and try to catch up. “Volume is not everything and maintaining the same level of growth is not everything,” commented chief executive officer Norbert Reithofer. “There are always internal discussions about volume, these tend to end with the conclusion that we cannot surrender market share, but only if you have a good margin contribution.”

Last year’s fourth-quarter financial results showed the carmaker’s earnings margin for the car division slowed from 9.2 percent during the same period a year ago to 8.2 percent in 2014 – even as the company had record sales of vehicles. BMW Group, which includes the Mini and Rolls-Royce brands, announced they saw a “solid” increase in deliveries and pretax profit in 2015, with a margin ranging from a medium to high single-digit figure for the percentage rise. The company again expects record profits and sales for they year, but analysts said investors were actually rooting for a “significant” prediction, translated to a growth of more than 10 percent.

Via Reuters