[DJ]

Interesting article from Businessweek:

"By Chris Reiter and Andreas Cremer March 17 (Bloomberg) -- Bayerische Motoren Werke AG aims to raise deliveries by 54 percent by the end of the decade with new small cars and growth in China and India. Porsche SE has a target of almost doubling sales in the next five years.

Sales at BMW will exceed 2 million cars and sport-utility vehicles by 2020 compared with more than 1.3 million this year, Chief Executive Officer Norbert Reithofer said today. Porsche, the maker of the 911 sports car, is sticking to a “medium- term” target of 150,000 vehicles as auto markets expand and the company adds models, Albrecht Bamler, a spokesman, said today.

BMW, the world’s biggest maker of luxury vehicles, is counting on cars such as the revamped 5-Series sedan to help restore earnings this year after profit fell in 2009 to a 10- year low because of a loss at the auto division. Stuttgart, Germany-based Porsche predicted a second consecutive full-year loss today due to the costs of combining with Volkswagen AG, while sales will rise “slightly” as markets revive.

“The long-term sales targets are realistic,” said Daniel Schwarz, an analyst at Frankfurt-based Commerzbank AG with a “hold” recommendation on BMW stock and a “reduce” on Porsche. “One-third of worldwide auto sales is destined to regions with an extremely low degree of motorization, especially China. So the potential to achieve these delivery levels is fully in place.”

China overtook the U.S. as the world’s biggest auto market in 2009 with industry sales of 13.6 million vehicles. Passenger- car sales in February rose 55 percent.

Porsche’s vehicle sales in the fiscal year ended July 31 totaled 75,238 cars and SUVs. Deliveries in the six months through January declined 1.7 percent to 33,670 vehicles, Porsche said today.

Shares Decline
BMW fell 29 cents, or 0.9 percent, to 32.47 euros in Frankfurt trading. That pared the stock’s gain this year to 2.1 percent. Porsche fell 32 cents, or 0.7 percent, to 43.46 euros, leading to a 0.6 percent decline this year.

Reithofer forecast a “sharp” gain in BMW’s profit in 2009. In addition to a new version of the BMW 5-Series going on sale later in March, the Mini division is introducing the Countryman crossover in September, the small-car brand’s first four-door model. Models reaching the market last year included the X1 compact SUV and 5-Series GT crossover. BMW said sales will increase in the U.S. and Germany, its two biggest markets, as well as in China, Brazil and India.

BMW’s Challengers
Volkswagen’s Audi division has set a 2015 goal of dethroning BMW as the world’s top luxury-vehicle manufacturer. Daimler AG’s Mercedes-Benz, which BMW overtook in sales in 2005, is also introducing cars targeted at its larger rival. Reithofer said BMW will meet those challenges.

“We intend to remain the most successful premium carmaker,” Reithofer said at a news conference at BMW’s Munich headquarters. “That’s our clear objective.”

BMW’s target is “a big number,” said Jose Asumendi, a London-based auto analyst at Royal Bank of Scotland Group Plc with a “buy” recommendation on the carmaker’s stock. “The solution for BMW is that they have to get big” to offset Audi’s advantage of being part of VW, Europe’s largest carmaker.

The decline in Porsche’s six-month deliveries slowed from a 40 percent drop in the fiscal first quarter, reflecting “clear signs of an upward trend,” the carmaker said. Sales will be helped by the new, four-door Panamera that went on sale in September, Porsche said.

‘Solid’ Growth Forecast
BMW forecast a “solid single-digit” percentage increase in deliveries for 2010 from last year’s 1.29 million cars and SUVs. IHS Global Insight research company estimates BMW will sell 1.37 million vehicles this year.

Net income in 2009 dropped 36 percent to 210 million euros ($289 million), BMW’s lowest earnings since a loss in 1999, as the automotive division had a 265 million-euro loss before interest and taxes.

The automaker, which is developing electric-powered city cars, said today that it plans new front-wheel-drive compacts for the namesake brand, a departure from a lineup now dominated by rear-wheel drive.

The platform will serve as the basis for both Mini and BMW vehicles and may make its appearance in 2014, when the current Mini is due to be overhauled, Klaus Draeger, BMW’s development chief, said. The drive system will represent “a great opportunity” to win new customers for BMW cars with vehicles smaller than the 1-Series compact, currently the brand’s smallest model, said Ian Robertson, the company’s head of sales.
Chinese Sales

BMW’s sales in China this year are likely to rise by a “strong double-digit” percentage and may exceed 100,000 vehicles this year, Robertson said. The company is investing almost 600 million euros to expand capacity at its joint venture plant in the country to as many as 300,000 vehicles from about 41,000 currently. BMW will introduce a longer version of the 5- Series exclusively for China later his year.

BMW’s Indian factory is approaching capacity limits and the company may look to add a manufacturing line there, said Frank- Peter Arndt, the head of production.

BMW is road-testing an electric version of the Mini in the U.S. and Germany and said today it may start volume production in the next five years. The company plans to continue electric vehicle tests with the BMW Active E prototype in 2011."

Source: http://www.businessweek.com/news/201...ble-sales.html

[Jo_Switzer]

"Let's make these very special cars much less special by flooding the market with them!"
- joint statement from heads of marketing, BMW and Porsche

[mtechnik]

Good read, thanks DJ.

I would like makes like Porsche and BMW to stay on the forefront of technology and continue building great cars for people who love to drive. What I don't want is for them to turn into Toyata... It's going to be interesting to see how luxury automakers position themselves in the market and ramp up sales to make up for '09 losses.



Another good article from WSJ:

FRANKFURT (Dow Jones)--BMW AG (BMW.XE) said Thursday it wants to sell between 700,000 and 1 million vehicles annually based on its planned joint architecture for small cars from 2014 or 2015 as part of the German luxury car maker's wider effort to boost its presence in this fiercely competitive market segment.

"The first car based on this new architecture will be one of our current Mini ... hatchbacks, followed by a smaller BMW," Chief Executive Norbert Reithofer said Thursday during an analyst presentation.

He declined to elaborate further "because then Mr Winterkorn knows it as well," referring to Volkswagen AG (VOW.XE) Chief Executive Martin Winterkorn.

The Munich-based firm sold 1.29 million BMW, Mini and Rolls-Royce branded vehicles in 2009, with small and compact cars accounting for around 400,000 vehicles.

On Wednesday, BMW said it aims to ramp up sales in the growing small-car segment, both for its compact Mini brand as well as its core BMW marque, with annual growth rates in this segment anticipated to be between 4% and 6%.

"There will be front-wheel drive BMWs in the smaller vehicle classes in the future," Reithofer confirmed, noting that BMW wants to "grow profitably in this segment" despite fierce price pressure.

The world's largest premium automaker by sales plans to sell 1.6 million vehicles in 2012 and targets an auto sector return on sales of between 8% and 10% in 2012 and a return on capital employed of more than 26%.

Chief Financial Officer Friedrich Eichiner sought to ally fears that a larger portion of small cars would eat into BMW's profitability, as these vehicles usually have thinner profit margins than large, souped-up cars. Eichiner said BMW "expects to maintain" the profitability level beyond 2012.

Reithofer pledged that BMW won't launch its best-selling 3-Series or any larger model with front-wheel drive, adding that the next generation of the compact 1-Series to be launched next year will also have rear-wheel drive.

The world's three largest luxury car makers are plotting stronger inroads into the compact-car segment amid a broader trend among consumers towards smaller and fuel-efficient vehicles.

German peer Daimler AG (DAI) is in talks about an alliance in this segment with other automakers, including Renault SA (RNO.FR), in order to reap cost synergies and improve profitability. The maker of Mercedes-Benz cars is also building a new plant in Hungary to improve the cost structure of the next generation of its compact A- and B-Class models.

Audi AG (NSU.XE) is launching its new A1 model, a small car below the current A3 hatchback, to tap the small car segment for further growth. Audi benefits from economies of scale from its parent Volkswagen, Europe's largest automaker by sales.

Company Web site: BMW automobiles - website of the BMW AG

-By Christoph Rauwald, Dow Jones Newswires; +49 69 29 725 512; christoph.rauwald@dowjones.com

Source>>UPDATE: BMW Gears Up For Sales Boost In Small-Car Segment - WSJ.com

[chokeu2]

Wow... To do that, they've going to have to do like the guys have already said, which is make them less "special". Drop costs, crank out commodity cars... I do not call this good news.

[Tsar]

Quote:

Originally Posted by mtechnik »

Good read, thanks DJ.

I would like makes like Porsche and BMW to stay on the forefront of technology and continue building great cars for people who love to drive. What I don't want is for them to turn into Toyata...

Quote:

Originally Posted by chokeu2 »

Wow... To do that, they've going to have to do like the guys have already said, which is make them less "special". Drop costs, crank out commodity cars... I do not call this good news.

I agree with both of you. I don't want either manufacturer to start cranking out cavaliers, and camry just so they can increase market share. Maybe 10 years away from now we will have to start looking at some other companies.

[erliuic]

“The solution for BMW is that they have to get big” to offset Audi’s advantage of being part of VW, Europe’s largest carmaker.

^ can someone explain this statement?