Volkswagen and BMW see difficult 2013 due to tough rivalry, economy

Article by Anita Panait, on March 18, 2013

German carmakers Volkswagen Group and BMW Group expect a "difficult" 2013 as the vehicle market in Europe contracts, car prices drop and growth in China slows down. According to VW chief executive Martin Winterkorn, the carmaker is facing tougher competition and difficult economic conditions.

On the other hand, BMW CEO Norbert Reithofer said that conditions will likely remain challenging in many markets. Vehicle sales across the industry in Europe dropped in January to their lowest level since 1990, according to industry association ACEA. BMW and VW are both banking on growth in China and the United States to offset their shrinking sales in Europe.

BMW disclosed that its carmaking unit posted lower profits in 2012, as analysts expect the carmaker’s earnings to drop this year. Stefan Bratzel, director of the Center of Automotive Management at the University of Applied Sciences, remarked that Europe is not the only market where conditions are deteriorating.

He noted that growth in China decelerated to a one-digit percentage rate in 2012 while the US market will likely level off this year. He quipped that at the same time, costs to expand sales and services organizations are increasing. Winterkorn said during a press conference at VW’s headquarters in Wolfsburg that the carmaker is expected to log an increase in earnings before interest and taxes in 2014 after its 2013 profit matches the 2012 figure.

Another German carmaker, Daimler AG, made a forecast in February that its operating profit in 2013 will be flat from 2012. BMW reiterated that it is planning to post a third consecutive record this year in annual deliveries. BMW will release more forecasts for 2013 on March 19.

Topics: vw, bmw

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