Waning Luxury-Car Sales Hurt BMW Revenue

[Plex]

FRANKFURT—Germany's BMW AG said Friday its 2009 revenue fell 4.7% from a year earlier, reflecting the woes luxury car makers faced as demand for their vehicles contracted sharply, but that it still expects to post a profit for the year.

The Munich-based company said 2009 revenue fell to €50.68 million, but it still hit its targets. BMW Chief Executive Norbert Reithofer attributed the forecast profit to cost management and other measures aimed at improving profitability.

"Despite the ongoing world-wide financial and economic crisis, the BMW group has, from today's perspective, achieved the objectives for 2009," the Munich-based company said in a statement.

Sales in 2009 fell 10.4% from a year earlier to 1.29 million cars, but BMW retained the crown as the world's best-selling premium car maker ahead of Daimler AG's Mercedes-Benz brand and Volkswagen AG's Audi AG unit. The company, which is expected to release detailed earnings figures for the fourth quarter and full year on March 17, previously had said it could avoid a loss even if sales slumped by up to 15%.

For 2010, the company expects a slight increase in vehicle sales, namely a single-digit percentage rise to 1.3 million cars. Growth is expected in Brazil,China and India – emerging markets where BMW also saw increased sales in 2009. The car maker also targets sales growth in Germany in 2010, and in the U.S. market as well.

Last year, BMW was hit particularly by the U.S. market downturn, as North America has been the company's largest sales region until recently. BMW currently is expanding annual production capacity at its U.S. plant in Spartanburg to around 240,000 cars from about 160,000 vehicles previously, mainly to reduce its exposure to currency fluctuations, which have been a major concern in recent years.

Although the economic crisis will continue to affect auto makers in 2010, BMW said it will grow this year due to the gradual economic recovery and a slate of new models.

"The BMW group can start the new year with a certain amount of optimism," Mr. Reithofer said, adding the company will remain the leading provider of premium vehicles.

As previously reported, car sales at the company's core BMW brand were down 11.1% in 2009 at 1.07 million vehicles. BMW's compact Mini brand posted a 6.8% decline year-to-year to 216,538 vehicles.

BMW expects the new X1 and 5-Series Gran Turismo will foster sales momentum, with demand fueled further between 2010 and 2012 when the new versions of the fast-selling models are set to hit showrooms.

WSJ