The US market a concern for BMW, top executive says image

Even if China is now seen as a quite stable market for BMW, the trend for the US market is hard to predict at this moment, according to the company’s chief financial officer.

The sales leader of the premium segment ended 2015 with a 5.2 percent profit increase, a result mainly backed by sales volume growth. However, keeping its earnings up will prove a challenging task in the coming year, as BMW has to heavily invest in expanding and refreshing its lineup, as well as in the development of new technologies and digital businesses, all for not losing its crown to its main rivals. The Bavarian automaker faced some pressure in China last year, where the slowing economy hit sales of the entire luxury sector. Deliveries of the Group’s vehicles rose only by 1.7 percent in China in 2015, while weak demand saw Rolls-Royce’s annual sales dive 6.8 percent.

But BMW has no worries about China. Chief Financial Officer Friedrich Eichiner said that after taking out inventories to restore demand in China in the fourth quarter, the market appeared to have bottomed out. “Pricing is fairly stable now, not deteriorating. We now see the bottom of normalization in this period,” Eichiner told analysts at a recent presentation to discuss full-year results. The company drastically reduced the number of cars on sale in China, a step that helped improve working capital by about 750 million euros, he said.

On the other hand, the financial outcome on the second biggest market for the Group – the United States – is hard to predict in the near future. “Our concern is in the US market. Where is it going? We see some pressure from the used car market already,” Eichiner revealed. “We already started rebalancing inventories. For me the U.S. market is the biggest risk this year.”

Via Reuters