Bmw says that rising incentive levels will not be very profitable

Article by Christian Andrei, on March 15, 2012

BMW voiced a warning that the trend of offering more incentives to potential customers of luxury cars (a practice that reduces profits) will continue. In a Webcast, finance chief Friedrich Eichiner told analysts that at the start of the fourth quarter, it seems that there’s increasing pressure on pricing. He said that at the moment, it’s not clear when it will end.

Because of competition reasons, BMW doesn’t provide a separate account of the net effect of pricing power on its earnings. However, the automobile unit's earnings before interest and tax (EBIT) rose by 3.14 billion euros ($4.12 billion) in 2011 as the result of combining balance of volumes, sales mix and pricing.

He added that efficiency gains would be in the medium to high hundreds of millions of euros in 2012, compared with 520 million last year. He explained that BMW's financial services business reserved a risk provision of around 100 million euros in 2011 because of exposure to the luxury car market in southern Europe. [source: Autonews]

Topics: bmw

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