BMW is expecting to “achieve a significant rise in sales volume in 2014 which would take us to a new, all-time high of over 2m vehicles”, chairman Norbert Reithofer told the annual general meeting in Munich on Wednesday (19 March, 2014).
The automaker expects that planned growth in sales to be reflected in group pre-tax profit (EUR7.71bn in 2013).
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“We expect group profit before tax to rise significantly in the current year despite ongoing volatile business conditions,” added Reithofer.
But he cautioned the pace at which earnings increase “will, however, be affected by high levels of expenditure for new technologies and by rising personnel expenses”.
Despite the spending on new technology, BMW expects its automotive segment will again achieve an EBIT (earnings before interest and taxes) margin in the range of 8%-10% (9.4% in 2013).
“Tailwind will also come from the 16 new models and model revisions which the group plans to launch this year, Reithofer said.
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By GlobalDataThe financial services segment is expected to continue growing in 2014 but, due to growth-related investments, return on equity is expected to fall slightly from last year’s 20.2% but still pass the group minimum requirement of 18%.
As reported last week, BMW last year booked group revenue down 1% year on year to just over EUR76bn due to exchange rate effects, group pre-tax profit up 1.4% to a record EUR7.91bn and group net profit up 4.5% to EUR5.34bn. Vehicle deliveries world-wide rose 6.4% to 1.97m units.
‘Balanced sales distribution’
Reithofer told the AGM BMW is aiming for “a balanced sales distribution” this year in the three largest regions – Europe, Asia and America.
“In 2013, we were able to compensate for the weakness of some European markets by further growth in the US and China. Our two largest individual markets, China and the USA, accounted for a share of about 20% and 19% respectively of group total sales; our home market Germany for around 13%.”
He added: “In our efforts to tap into high-potential markets, we act in line with a sound principle: production follows the market. In 2014, we are strengthening our global presence.”
That will include adding the new X4 to the other X series model lines built at the Spartanburg plant in South Carolina which, Reithofer noted, is now “the largest exporter from a NAFTA country” and made 300,000 units in 2013.
Global capacity increasing
“The US will stay a market with great potential for us [with single figure growth forecast for 2014],” Reithofer said. “This is why we are evaluating the possibility of increasing capacity in the US.”
Chinese production capacity (the joint venture with Brilliance Auto) expanded by up to 300,000 last year, could be bumped to 400,000 in the medium term and a new engine plant is set to open in 2016.
The new Brazilian plant will open next autumn [sales and marketing chief Ian Robertson told just-auto earlier he is very proud of BMW’s pioneering new powertrains for the market; the first ethanol-capable premium segment vehicles to be sold in Brazil]. The automaker will initially assemble 30,000 cars a year with 1,300 workers, following a EUR200m spend.
Netherlands production of Mini hatchbacks is also set to begin this summer at new partner VDL NedCar in Born (the former Mitsubishi/Volvo/Daf plant).
New product plans
Product rollouts in 2014 will include the i3 EV in the US, the “most important market for electric cars” with more development of the E-Mobility Network with carbon fibre construction applied to more series models.
Reithofer said BMW is basing its urban zero emission driving models on the electric motor and said “battery technology will continue to progress”.
“When it comes to emission-free, long distance driving, however, electric cars featuring hydrogen fuel cell technology offer great potential. Alternative drive technologies are key towards meeting the global CO2 targets in 2020.”
As Robertson told us earlier, Reithofer said BMW is eyeing more opportunities to expand its model lines. “There is strong growth potential in the smaller vehicle segments, especially in Europe, and we plan to capitalise on this potential. So the share of smaller cars in the global sales volume of the group will increase.”
Tellingly he added: “And we must ensure that this growth also remains profitable.”
Future group vehicles will be built on two architecture types: one for rear- and four-wheel-drive BMW models and one for front- and four-wheel-drive BMW (eg the new 2 Active Tourer) and Mini.
Reithofer said: “This will enable us to achieve synergies between the BMW and Mini brands; the application of standardised module kits; and cost savings throughout the entire process chain.
“Our vision for 2020 is to be the leading provider of premium products and premium services for individual mobility. Even today, we are much more than just a manufacturer.
“We are clearly moving towards being a provider of attractive mobility and connectivity services.
“That is what ConnectedDrive and DriveNow stand for. With the realignment of the ConnectedDrive services, BMW is extending its position as the leading provider of in-car, online-based services.
