BMW reported a surprise rise in third-quarter operating income as strong sales in higher-margin core European markets outweighed weak demand in China, keeping profitability within its target range despite high investment in new models.
The company’s automotive operating profit margin slipped to 9.1% from 9.4% a year earlier, behind rival Mercedes-Benz’s 10.5% but beating Audi’s 8.0% in the quarter.
The other two premium German carmakers are challenging BMW’s global leadership in luxury car sales, but BMW said it “firmly intends to remain the world’s leading premium manufacturer of vehicles in 2015” ahead of its centenary next year.
Some analysts have criticised the chasing of sales volumes over profitability, which they say was supported last quarter by accounting for more of the upfront development costs over a number of years, flattering the margin.
“The latest emissions scandal at Volkswagen should once again make it clear that size is no virtue in itself,” NordLB analyst Frank Schwope said, referring to widening accusations of air pollution test cheating against VW on Monday.
BMW said yesterday it still expected a profit margin in the automotive division of 8-10% this year, compared with 9.6% in 2014, as well as higher sales and pretax profit.
But the Munich-based group cited a raft of headwinds including heightening competition in the US, upfront spending on new products and technology as well as rising personnel costs and slowing demand in China.