BMW Bets on Year of Records to Reclaim Premium Car Crown -- Update
March 21 2017 - 1:29PM
Dow Jones News
By William Boston
MUNICH-- BMW AG's chief executive, fresh from a visit to the
White House, is targeting record sales and earnings this year and
recovery in the U.S., riding the luxury car maker's biggest-ever
rollout of new and revised vehicles.
In the car market, BMW wants to recover the crown as top premium
car brand from rival Daimler AG's Mercedes-Benz. In the political
arena, CEO Harald Krüger wants to avoid attacks from President
Donald Trump.
"I told him that the U.S. is our second home," Mr. Krüger said
of his conversation with President Trump, which was part of a visit
to Washington by German Chancellor Angela Merkel.
The U.S. market is vital to BMW. Germany's big three luxury
brands--Mercedes, BMW and Volkswagen AG's Audi--have been locked in
a bitter rivalry for decades and together dominate the global
market for premium passenger cars. After a decade of leading the
pack, BMW took its foot off the gas last year, creating an opening
for Mercedes to race past and reclaim the top spot.
Mr. Krüger at a press conference played down BMW's fall to
second-place. He pledged to fix markets that have underperformed,
especially the U.S., where BMW sales fell nearly 9% last year.
"In 2017 we are starting the biggest model offensive in the
history of the BMW group," he said. "We are going to launch more
than 40 new and revised models in the market this year and next
year."
Mr. Krüger has come under pressure to push harder to refresh
BMW's model lineup after Daimler overtook the company's namesake
BMW brand in sales last year. BMW margins slipped in 2016 after it
misread tastes in the U.S., the biggest premium auto market in the
world, even as BMW focused on the new generation of its flagship
5-Series sedan.
BMW has been rebalancing its U.S. mix after dealers were left
holding unsold sedans when the U.S. market shifted back to
sport-utility vehicles and light duty trucks. The cornerstone of
BMW's comeback in the U.S. is its 5-Series sedan and a batch of new
and revised SUVs.
Chief Finance Officer Nicolas Peter said BMW was targeting a
"slight increase" in new car sales and pretax profit this year
after 2016's record earnings and sales. He said BMW expected growth
in all regions this year. Despite higher upfront development costs,
BMW left its pretax profit target in its core automotive division
at 8% to 10% of sales.
Many of the new models that BMW is launching by the end of next
year will be SUVs and sports activity vehicles, or SAVs, one of the
hottest crossover segments.
Ian Robertson, BMW's head of sales, acknowledged that sales of
the 5-Series trailed off as the company prepared the new version.
He said 5-Series sales should now start to pick up in the U.S.
"The market in the U.S. has definitely swung in favor of SUVs
and SAVs, but the sedan segment is still very very strong," he
said. "I don't think there is going to be much upside growth in the
overall U.S. market this year, but I do see that the mix of
products on offer from us as it progresses through this year will
help our segment share which is moving in a positive direction
again."
Complicating BMW's plans, President Trump singled out BMW in a
threat last month to impose border taxes against auto exports.
Mr. Krüger said he took the opportunity of his Washington trip
to talk about BMW's plant in South Carolina, from which it exports
SUVs world-wide. He said a border tax wasn't discussed "but we
talked about free trade, which of course is the prerequisite in
order to export from the U.S."
When President Trump met Mr. Krüger he told him the sprawling
plant in South Carolina was "incredible," BMW officials said. The
president hasn't visited the plant. "It is our understanding that
he flew over it, " one BMW official said.
Write to William Boston at william.boston@wsj.com
(END) Dow Jones Newswires
March 21, 2017 13:14 ET (17:14 GMT)
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