BMW Plants Defy Recession Threats
Bayerische Motoren Werke AG (BMW)’s plants continue to churn out cars at a record pace and buyers of the revamped X3 sport-utility vehicle will have to wait until 2012 for delivery, Chief Financial Officer Friedrich Eichiner said.
“Our business indicators don’t show signs of a recession,” Eichiner said at a Munich briefing with journalists yesterday. “Our factories are working at full tilt.”
Sales for the maker of BMW, Mini and Rolls-Royce cars rose 7.4 percent to 110,891 vehicles in August boosted by the X3. The $36,750 mid-sized SUV was revamped last year and orders made now won’t likely be delivered before next year, Eichiner said.
BMW, Daimler AG (DAI)’s Mercedes-Benz and Volkswagen AG (VOW)’s Audi are forecasting record sales this year amid increasing demand in China and the U.S. Audi said last month that the carmaker is hiring staff to increase car production, including a 57 percent capacity boost for the 69,600-euro ($96,575) A8 flagship sedan, on expectations that the luxury-auto industry will weather the stock-market slump. Mercedes is also raising output.
BMW’s upbeat outlook contrasts with widespread concern about an economic slowdown. European Central Bank President Jean-Claude Trichet said yesterday that threats to the euro region’s economy have “intensified” as the region’s debt crisis worsens. The carmaker’s shares have tumbled on the gloom, dropping 23 percent in the past two months.
Even as current business appears insulated from the economic risks, BMW is prepared for a slowdown after trimming costs and reducing its leasing business to lower financial risk during the 2009 recession, Eichiner said, adding that BMW could withstand a similar crisis without its automotive business slipping to a loss.
“We have to be careful not to talk ourselves into a crisis,” Eichiner said. “Buying decisions are emotional, and at some point the talk of a slowdown becomes a self-fulfilling prophecy.”
New products like the revamped 5-Series and X1 compact SUV are helping to maintain demand even amid economic uncertainty, he said. The manufacturer will continue to roll out new models and will present the Mini Coupe and an overhauled version of the 1-Series compact next week at the International Motor Show in Frankfurt.
To support plans to boost sales to more than 2 million vehicles by 2020, BMW will likely decide this year whether to build a new plant in Brazil, Eichiner said. The company is also hiring 3,500 people in 2011 as it seeks new talent, especially to design and build electric vehicles, personnel chief Harald Krueger said at the briefing.
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