BMW sees China, Russia woes this year image

The world’s largest luxury automaker, Germany-based BMW AG, has just reported spectacular first quarter financial results, but the company is already planning ahead its strategy for the full year.

The main issues for the German automaker seem to be the slowdown in China and the plummeting Russian market for the year, with the former having the most impact potential due to the sheer size of the world’s second-largest premium market. BMW has announced recently it moved to lower production in the country because of the premium market decrease – which has impact the luxury automakers more than their mass-market peers – the government is enforcing its anti-corruption efforts and the economy is also slowing down to its lowest level since 1990. BMW’s Chief Financial Officer Friedrich Eichiner pointed the automaker opted not to push sales and instead align production with demand amid its aging fleet: the 3 Series is due for a mid-life update and the 7 Series is close to being changed into a new generation and so is the X1 crossover.

Meanwhile, the BMW chief executive officer Norbert Reithofer has also announced the carmaker has decided to shelf the decision on building a new assembly plant in Russia as the economic crisis rages on. The uncertainty surrounding the Russian market, once seen ready to overcome Germany and become Europe’s largest auto market, has already delivered a drop in demand of more than 40 percent in March. The executive has added the country has become a challenge for the company’s strategy in the region and thus decided to postpone the decision to establish a new production facility there.

Via Reuters