Big Plans

BMW eager to race ahead of rivals Mercedes, Tesla

Switzerland Geneva Auto Show
Trust me, it's better than an SUV. Source: AP

German carmaker BMW announced that 2017 was the best year in the company’s history, with the Munich-based group earning more than €10 billion ($12.3 billion) before tax for the first time, concluding its eighth consecutive record year. But BMW’s CEO Harald Krüger wants more, especially since his company’s announcement followed a similar one made by its Stuttgart-based rival Daimler, maker of the luxury brand Mercedes.

Mr. Krüger’s stated aim is to break more records in 2018 and then catch up with Mercedes by 2020, and all this despite trade disputes with the US and diesel woes.

BMW’s 2017 figures matched expectations. Analysts anticipated that the US tax reforms would add an extra €1 billion to profits. Major contributors to sales and profits, such as the 3 and 5 series and the X3, are going through a model change. This means customers are more likely to want the new model. To get rid of the old ones, BMW will either have to grant discounts or cut sales.

Unfortunately for BMW, the group misjudged the US market and still has too few SUVs in its repertoire. Meanwhile, the diesel mess has unsettled customers in Germany and the UK, although in the end BMW sold only 30,000 fewer diesel vehicles than in the previous year. In contrast, the market for company cars in Europe is thriving and there is no end in sight for the automotive boom in China. In total, the BMW brand sold 4.2 percent more cars than in the previous year, surpassing the threshold of 2 million for the first time.

This uptick in sales helped BMW increase its lead over another German rival, Audi. But not Mercedes. The company is around 200,000 units behind the latter luxury brand. If added together with its British subsidiary Mini, though, the BMW Group came out ahead of Daimler’s Mercedes and Smart brands.

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