BMW Cautious on U.S. and Europe as Emerging Markets Surge

Bayerische Motoren Werke AG (BMW) said new models are spurring sales growth in emerging markets to as high as 70 percent, just as demand in Greece and southern Europe drops and economic data suggests a cautious outlook in the U.S.

Markets including China, Brazil, South Korea and Turkey are exhibiting sales growth of 60 percent or more, while Europe is “a tale of north and south,” BMW Marketing Director Ian Robertson said today in an interview.

“While we’re enjoying a lot of success with new models and seeing many markets moving very strongly, we also see some potential risk,” Robertson said in London. “Certain economies around the world will go into a more difficult situation.”

BMW’s automotive division lifted its profit and sales forecasts two days ago, saying strong second-quarter demand will continue in coming months. The Munich-based carmaker anticipates selling 1.6 million vehicles this year, with earnings before interest and taxes exceeding 10 percent of revenue.

The U.S. auto market is still a long way off its peak of about 17 million sales in 2007, and may reach 12.5 million to 13 million in 2010 from a low of about 10 million, Robertson said.

“There are a number of economic indicators in the U.S. that tell us we should be more cautious,” he said. “Unemployment is not coming down, and the housing market is not recovering.”

‘Disappeared’

American employers added jobs at the slowest pace in nine months in June and the unemployment rate unexpectedly climbed to 9.2 percent, a U.S. government report said July 8. U.S. home values have declined 34 percent since peaking in 2006, according to figures from S&P/Case-Shiller.

Northern Europe is “doing pretty well” and in the U.K. fleet sales are “good,” though the retail environment has been “more challenging” Robertson said. “Southern countries have been extremely difficult,” he added, and “the Greek market has virtually disappeared.”

BMW will replace about 60 percent of its model range with new products by the end next year, the executive said, and has already introduced an overhauled X3 sport-utility vehicle and a refurbished 6-series convertible this year.

The Welshman was in the U.K. to promote BMW’s involvement in next year’s London Olympics. The German company will provide the organizer with 4,000 cars, cycles, motorbikes and scooters and is also sponsoring a mobile application to aid navigation and another, “Park at My House,” which will help match motorists with the owners of vacant off-street parking spaces.

To contact the reporter on this story: Steven Rothwell in London at srothwell@bloomberg.net

To contact the editor responsible for this story: Chad Thomas at cthomas16@bloomberg.net

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