Is BMW Losing Out in the Profits Race to its Rivals?

I hope they sort this out quickly..... GO BMW!

I hope they sort this out quickly..... GO BMW!

I really do not agree with this article, i mean BMW is selling more cars AND making more money, and i did the math, only to find that the ratio profits/car has increased in 2006. As for others catching up, well maybe Audi is, but that does not necessarily imply that BMW is losing money, it can be that Audi has had a higher increase of its profits/car ratio than BMW, but that, all be it good news for Audi, does not mean BMW is going, down, and btw, on a lighter note, they never will if they keep making cars like they do...

I guess do you want to make your money on the Neiman Marcus philosophy of maximized profit per quality item, or the Walmart philosophy of volume and low margins.

Volume clearly solves many woes, but when a downturn is experienced then your real problems occur.

I am surprised that a car company who offers an integrated cell phone for only $900 can't seem to make more profit, lol.

I smell BS.

They should look to Toyota for some help with a Hybrid engine. Also, please do not go downmarket in North America with a car like the 1 series. Their "premium" image will take a hit even more for the sake of low-end sales. You don't see Lexus introducing "cheaper cars" that might alter their prestige factor.

Sounds like this article was funded by some disgruntled and jealous employees over at Audi AG.

Every other luxury brand splits its development costs with its parent company. BMW can't borrow Daddy's money it has to do its own work.

If you look at the financial results of the three German automakers you will wonder what the gripes is all about.
Looking at the last three years:
-----------------------------------2004-------2005---------2006
BMW Rev(bill Euro)------------44.34-------46.66--------49.00
MB Rev(bil Euro)---------------49.63-------50.02--------54.58
Audi Rev(bil Euro)--------------24.51------26.59--------31.14
BMW Profit(bil Euro)-----------2.24--------2.24----------2.87
MB Profit(bil Euro)--------------1.67--------(0.51)-------2.41
Audi Proft (bil Euro)------------0.87--------0.82---------1.34
BMW R&D (bil Euro)-----------2.33---------2.46---------2.54
MB R&D (bil Euro)-------------2.63---------2.42---------2.18
Audi R&D(bil Euro)------------1.21---------1.59---------1.98.

So BMW still has healthy profit margins, Audi is the biggest spender of R&D as a percentage of Revenue. Both Audi and BMW are increasing their R&D while MB is cutting back on R&D to prop up profit it may seem.

So the article is a bit misleading in my limited opinion

admiral thanks for those true facts, read this article on detorit auto news, I could understand what this journalist was saying. How could record setting profits receive such bad press, Just imagine if BMW was not profitable how much bad press they would receive. BMW fans have to remember jealousy comes with success, you can judge how successful BMW is buy looking at the imitation products of other car makers, Lexus, Infinti, Audi, Cadillac, Acura etc. Imitation is the sincerest form of flattery.

u r so right, thank you for bringing this to our attention!

sailor, BMW profit is not going down according to the Admiral post it BMW profit boosted from 2.24 to 2.87, it right on screen spelled out and you can get that right , Sailor a BMW hater who can not accept the BMW success. Admiral could not have posted any clearer. people believe what they want to believe facts or not.

what is ur problem with BMW? VW is making money on its own, and if anything, it's Porsche's money that is holding VW, because unlike Audi, they are about to get 30% shares in the VAG group!
don't get me wrong i love Audi but is the second most profitable independant car maker in the world, after Porsche, and Audi's recent Thriving is based on the making their cars according to BMW's philosophy, Ultimate Driving machine, as opposed to what they used to do before, that, which is to try to copy mercedes. They have understood that being associated with BMW is a good strategy. Infiniti, and lexus recently understood that too, and eventhough i don't really like what they do, i still applaud their efforts - i don't want to get the shit about Hybrid, because that is Toyota, brand-name-wise i mean, and it still is a niche market...-
BMWs have a heart instead of an engine, pumping blood and soul instead of fuel, and the only competition here is from Ferrari!

Guys, The title is just a bit misleading. BMW is very profitable and has increased its "total" profit every year, but the article is zeroing in on its profit margins (i.e., cash left over per car after cost of materials) which has gone down a bit. This could mean many things, but in simple terms:
1) they are lowering their overall sale prices (i.e., lower markups..incentives etc..)
2) Their cost of producing each car has gone up.
3) Everything is basically, the same, but they now sell many more high volume/lower profit per car models (mini and 1 series come to mind) that are consequently diluting their overall "margins per car". Depending on their strategy, sales goals etc.. its not necessarily a bad thing if the slide stabilizes, but if the trend continues.. they'll have a problem. In the short term, I don't see this as an issue unless Audi & merc are increasing sales and selling a similar mix of models while maintaining much healthier margins..

yea, Caltrans I'm clueless driving a BMW/Mercedes authentic rear wheel drive, sports coupe, while you dream of your front trak rebadged beetle/golf/toureg/polo cheap engineered Audi. AdimiralT20 post shows how far Audi is from the Big boys, keep dreaming caltrans.

TheGenius is on the money with his comments.