BMW Targeting Single-Digit Volume Growth in 2010, Confirms New Front-Drive Architecture

BMW's chief executive Norbert Reithofer has stated that the company is targeting a single-digit percentage improvement in sales volumes this year and improved group earnings from the 210-million-euro (US$287-million) net profit it posted for the full year in 2009. Perhaps bravely, the company is still sticking to one of the central goals of its "Number ONE" corporate strategy launched in 2007, which is to achieve an earnings before interest and taxation (EBIT) margin of between 8% and 10%. BMW has struggled in recent years to get near this. The company is optimistic that the global economic recovery will help underpin solid single-digit percentage growth for the full year in 2010 from the 1.22 million units it sold in 2009. In a company release Reithofer said, "We intend to remain the world’s leading provider of premium cars in 2010 and plan to increase sales within a solid single-digit percentage range to over 1.3 million vehicles." The company is hoping that the launch of the latest F10 5-Series, which made its debut at the Geneva Motor Show (Switzerland), will drive sales in Western Europe and Asia in particularly. It is expected that the new 5-Series will generate up to 20% of total BMW brand sales this year, with sales also supported by facelifted variants of the 3-Series Coupé and Convertible, while the new X1 and 5-Series GT are also expected to have a positive impact on the 2010 sales performance. However, BMW is not expecting a short-term uplift in sales during the first quarter as this period precedes the global launch of the new 5-Series and global car sales are expected to come in under fourth-quarter 2009 levels anyway, according to BMW's own forecasts. BMW chief financial officer (CFO) Friedrich Eichiner has said that the company's automotive segment will remain profitable in the first quarter, forecasting an EBIT margin in the "low single-digit percentage" region for the full year. Reithofer also confirmed that the company's long-term annual sales volume goal of 2 million units by 2020 remains in place, although the company last year reduced its mid-term goal of 1.8 million units to 1.6 million units by 2012.

Reithofer also confirmed that the company will develop a new, modular front-wheel-drive (FWD) platform architecture (see Germany: 10 March 2010: BMW Planning Audi A1 Rival) that will form the basis of the third-generation "new" Mini, which is due in 2014, and a new range of FWD BMW models that will slot into the range below the existing 1-Series. These models will be between 3.8 and 4.3 metres in length, according to an Autocar report, and the platform could form the basis of up to 20 separate BMW and Mini variants. According to a Financial Times (FT) report, BMW is also open to the idea of sharing the platform with other carmakers, which would further boost production efficiencies and economies of scale and allow the company to "achieve its profitability aims in the small car sector", according to Reithofer. Speaking at the company's annual results press conference, Reithofer estimated that the "premium small car" market will grow annually by 4–6% every year until 2020. The company also estimates that by 2020, the average carbon dioxide (CO2) emissions of its entire new car fleet will be just 117 g/km, a figure driven down by the new range of small FWD BMWs and the company's "Megacity" urban passenger car.

Outlook and Implications