BMW misses profit expectations, shares fall sharply

He just posted a press article based on facts, he didn't wrote/make it up.

amazinBimmer, I can hear what you would be saying if it were Audi's profits that were down:

"hahahahah what pieces of fwd crap vw shit. hahhaahha. bmw rules them anyday. haha im rich. audis are for poor people."

But instead of doing the same, I am also a BMW fan and this news is not good news.

I for one am not amazed at Bimmer. BMW is still gouging Canadians with prices that are much higher than U.S. prices for the same car even though the Canadian dollar is now worth more than the U.S. dollar. I say their profit woes are well deserved. It's about time all car manufacturers treated North America as a common market and organized their zone offices accordingly. There should be a uniform price in U.S. dollars right across North America.

In the US i think the housing meltdown is going to hurt the luxury end of the market. Credit is much tighter now, you actualy have to have money in the bank and good credit to buy nice houses and cars?

well, it's not quite a housing 'meltdown'...unless you consider an annual 4% decline in average sale price a disaster.

and though the credit crunch may affects those stretching to buy luxury cars...the truly well-off are in a better position than ever. i'd say weakening in entry luxury cars is possible.

No, the well-off are not "better than ever." My town, being one of the wealthiest in the nation, has for-sale signs littering every block and desperate realtors/builders scrambling to sell them. My own home, which was built in fall of 2006, probably would not have been sold yet if I hadn't bought it. There are some that are older than that (as new constructions)... still on sale. Now, our prices are still stable, but buyers aren't.

S4:

the well-off are in fact better off than ever. many of the people in those homes you speak of are not actually well off...owning an expensive home doesn't imply means.

my guess is you live in orange county, ca...the center of the world for leased cars and 100% financed houses with ARMs (hence all the for-sale signs).

No, I live on the North Shore of Chicago. Two of our towns are on the Forbes Top 10 Richest ZIP Codes List (per capita income). Of course, Rancho Santa Fe, CA is #1, and there are a couple other SoCal towns on there but they don't dominate the list.

Historically, I think, the true luxury market is more isolated from the issues we are seeing in the housing market. If a more affluent individual is smart, whether or not one finances thier home is a function of their opporitunity cost (and thus the interest rates involved). For example I know people who, at least according to them, have placed very large purchases on their Centurion card simply to push back the date that they must pay such that they can accumulate interest on the purchase price.

Anyway, the point is that those wo purchase luxury goods have a tendency to have incomes that fluctuate less. Now there some people whose lives are leveraged to high heaven and they are not as isolated.

My advice is to always save your money and buy real estate only when the market tanks and pay for it in cash unless interest rates are very low. All speculative bubbles eventually burst. I know everyone wants to own their own home but renting is always cheaper than the combined effect of property taxes, maintenance, and opportunity cost of having all that money tied up not earning interest. An apartment landlord can deduct all his property taxes and other expenses as well as take a capital cost allowance on the building. An ordinary home-owner cannot get these tax advantages. These tax deductions allow a landlord to charge a lower rent than would otherwise be possible.

Toyota growth is larger then BMW and Lexus is Toyotas #1 growth. Technology of IS350 has large power over c class MB. Lexus is always the car for men and its future to come remaining #1 in world.

i don't even know where to start...

toyota makes mostly econo-boxes. BMW makes luxury cars.

lexus financials are buried in toyota financials and are undisclosed. as such, we have zero visibility into lexus financial performance.

is there a point to your comment?

Yen .. huh? idiot .

Gee it looks like the brand that has a lower household income average than Audi, is showing poor results.

Its probably because of the low income people that are attracted to BMW's best seslling model.

This was so dumb, you had to post it TWICE?

I see a LOT more low income people attracted to Lexus than to BMW. What's that got to do with anything at all?

Low income people are attracted to Cartier jewelry too, and that doesn't seem to impact their earnings. I have no idea why I'm even replying to this.

low income? that report didnt say anywhere that the people that buy any of those luxury brands are low income, every single brand listed including lexus were 100 grand plus on average, i dont call arguing about a few thousand more a year bragging rights for a car brand. If BMW as an Independent luxury company, can muster the performance financially that it has had over the years without a parent company, imagine where it would be if it were Audi with Porsche, VW, and obviously Lamborghini to fall back on for R&D, and Profits. So Audi being able to use the mass production engines, chassis', and technology from VW and parts from VW's brands to cut costs is bragging rights it makes them what they are a brand, BMW is a company. Every company has a moment to reevaluate finances this is just BMW's

Gee it looks like the brand that has a lower household income average than Audi, is showing poor results.

Its probably because of the low income people that are attracted to BMW's best selling model.

here we go...

all the nutjobs suddenly become buy-side research analysts...

enthusiastx11> All due respect where do you live it must be isolated the housing crunch is one of the most serious problems this nation has faced in many a years. Citi corp and Country Wide are reporting record billion dollar loses and home buiders are being prop up as we speak as many may go out of business, the house cancelations and huge inventory of specualtor homes unsold haven't been seen since the great deoression.
Neighborhoods are half empty and for sale signs are a part of the landscape in America with no sold signs atop them. I'm realy dumbfonded but what you posted it is on every news cast, the Fed Reserve is trying to save the industry with no such luck thus we have $100 a barrel oil and the lowest the dollar has been in many a moon. House prices have dropped every month for a year where do you live and how much are you paying for gas i think you must not live in the US this is mind bloggling really how can you miss the crisis?

the subprime situation is a disaster. never said it wasn't. it will have repercussions for years.

but despite the sensationalist media headlines, the world is not collapsing. housing on a national level is not in a good situation...unsold inventory up, prices down about 4% year to date and lenient credit has dried up.

but housing is local....the northwest is booming. prime new york and los angeles are doing quite nicely. and more established cities and towns (i.e. those with little new construction) are doing fine.

is the ridiculous real estate boom of the past 5 or 6 years over? yes. and it was an anomaly in the past 100 years. real estate i soft, but in a year or two we'll be back to'normal' appreciation of 2-4% per year. no more of this unsustainable 20% a year insanity.

this is why i dont understand why BMW continues to go downward in its new models. creating cars that have low profit margins, and high sales is ok in some instances like more mainstream vehicles because they sell in the 6-7 figures a year. This profit thing seems to be a long running issue with BMW, the Sales are obviously there so instead of focusing on getting more high sellers, why not get more high end, high profit margin, low sales vehicles to bolster profits. There is room above the 6 series, 7 series, and X5.

Because they are an independent producer they are hurt more by currency fluctuations as well as new product marketing costs.

I think what they are attempting to do is expand their product offerings to capture more 'new' customers that have not purchased a BMW in the past. They have to grow or die in that respect.

Everything I have heard indicates that there will be several models above the 7er - including the new CS Concept (8 series) and a new Z8 and/or M10 super auto.( Not to mention the rapid expansion of the RR line)

The Quandt family won't sell, but they definitely want to see the profit percentage back up to industry leader levels.

They are investing in their future growth - expansion of South Carolina mftrg,fuel cell tech, etc...I think they will meet the corporate goals they have set out within the 5 year timeline they set up. IMO

BMW is over-priced. Well, at least the new 3 series is, and so is the upcoming 1 series here in the US. A well equiped 335i is $50-$53 thousands, and the said the 135i will start around $35 thousand. For a 1 series!!!

I don't see how BMW's CEO is going to sell all those cars he said BMW will when they price them so non-agressively.

well the 3 series is the best selling car in its class by a large margin, and is thousands more than most of the cars it competes with, so price vs sales doesnt seem to be a problem, its how much they are making off each sale that is the problem.

And most people lease it, getting better deals.

The 3 Series is fairly priced, whether you can admit it or not. Size is not what matters in that car. I wouldn't care if it was the same price as a base 7 Series... it would be worth it. It's only because the 3 Series is such an excellent vehicle. It does everything with amazing precision and confidence, from luxury to performance. $50K is a steal for what is the greatest entry-luxury car ever made.

investor:

what is the basis for your opinion for the 3-series being overpriced? it's the best seller in it's class by a HUGE margin despite being more expensive and bmw is having a record sales year. not surprising, given that it's simply a better product than what the competition offers.

if the 3-series were priced lower, bmw would be leaving money on the table. and that would be foolish.

There are too many auto executives who truly believe that they can overprice a car and use marketing know-how to get people to buy them. Well, it ain't working as well as it used to and it's about time they face the realities of today's car market. There has been too much brand abuse and brands are no longer as strong as they used to be. Luxury features have trickled down to lesser cars and companies like Hyundai are introducing luxury vehicles at impossibly low prices.

BMW Group confirms outlook.
The BMW Group’s performance continued as planned during the period under report. In total, 364,564 BMW, MINI and Rolls-Royce brand cars were sold during the third quarter 2007, 12.8% more than in the same quarter last year. The sales volume figure for the nine-month period was 1,094,849 units, representing a growth of 7.2%.This was also a new sales volume record for the first nine months of a year.

The Motorcycles business also progressed as planned, despite some difficult business conditions. In total, 23,549 BMW motorcycles were sold during the third quarter, 1.4% more than in the previous year. For the period from January to September, the number of units sold rose by 4.3% to a total of 82,779 motorcycles.

Financial services business continues to register double-digit growth rates. The number of leasing and credit contracts in place with retail customers and dealers at the quarter-end climbed to 2,539,701 units, 14.5% more than one year earlier.

Double-digit growth for revenues.
Group revenues rose sharply, reflecting the overall strong sales volume performance of the BMW Group. Revenues generated in the third quarter and for the nine-month period both increased at a double-digit rate. Third-quarter group revenues rose by 19.2% to euro 13,778 million, whilst revenues for the period from January to September climbed by 11.1% to euro 40,412 million. Excluding exchange rate factors, group revenues for the nine-month period would have risen by 14.0%.

Reported results benefited to an increasing extent from the rise in group revenues. This is reflected in the fact that the third quarter group profit before tax improved by 6.3% to euro 765 million. Adverse external factors continued to affect pre-tax earnings for the period from January to September 2007. The continuing weakness of the US dollar and the Japanese yen, combined with the higher cost of raw materials, continued to have an impact on group earnings. Costs also arose in conjunction with market launches and production start-ups for numerous new models. At euro 2,682 million, the profit before tax was therefore 17.4% lower than in the first nine months of the previous year. Excluding the impact of the partial settlement of the exchangeable bond on shares in Rolls-Royce plc, London, the profit before tax for the nine-month period would have fallen by 9.4%.

BMW Group reaffirms targets for 2007.
The BMW Group forecasts a continuation of its successful performance over the remainder of the financial year 2007.

Car unit sales for the period from January to September 2007 developed as planned. After moderate growth at the beginning of 2007, sales volume figures have gathered pace as the year has progressed. Against this background, the BMW Group reaffirms its forecast and expects the number of cars sold during the full year to increase in the high single-digit percentage range. As before, new high levels are predicted for all three brands.

Exchang

....Exchange rate factors and higher raw material costs will have an adverse impact on full-year earnings, in particular those of the Automobiles segment. Due to the faster sales volume growth rates, the BMW Group nevertheless forecasts higher pre-tax earnings for the Automobiles segment than in the previous year.

In the Motorcycles segment, the sales volume performance continues to reflect inconsistent market conditions. The BMW Group is responding to this situation by engaging systematically in new markets and making full use of potential efficiency benefits.

The stable growth enjoyed by the Financial Services segment represents a major contributing factor towards the overall success of the BMW Group. This positive trend continues unabated. The integration of Dekra SüdLeasing Services GmbH (now operating as BMW Fuhrparkmanagement Beteiligungs GmbH) and its subsidiaries into the BMW Group is progressing according to plan and is a logical step towards achieving future growth. Higher refinancing costs will, however, remain a challenge in the future.

The exchangeable bond option on the BMW Group’s investment in Rolls-Royce plc, London, was largely settled in 2006 and there will be no comparable impact on earnings in 2007.

Stable growth in the operating segments as well as continuous efficiency and productivity improvements will provide further momentum for group earnings during the remainder of the year. Adverse exchange rate factors, higher raw material costs and less favourable refinancing conditions as a result of higher interest rates still remain the main challenges to be overcome as far as future earnings are concerned. In particular, the continuing weakness of the US dollar and the Japanese yen continue to have a negative impact on earnings. Despite these negative factors, the BMW Group maintains its business forecasts for the year and expects each of the segments to perform well for the year as a whole. Excluding the exceptional gain on the Rolls-Royce exchangeable bond, the BMW Group aims to achieve higher pre-tax group earnings in 2007 than in the previous year.

The BMW Group is confident of remaining on growth course in the coming years and of continuing to generate above-average returns for the sector.


-BMW GROUP
-third quarter Financial report
-released today 11-6-07

Does anyone have sales numbers on the 3-series since its introduction compared with the e46 model? My guess as others have said, the 3 series is overpriced. 49-50k for a decently optioned 3 series is just to high in my book. (bought a new 325ci in 2001 for 33k). I'd take a G37S for 41k nicely optioned instead. The 3 is a great car, if BMW sold it within 1-2k of the G, they'd be making money.

Could it be that they are not making huge profits because of all those leased 3 series? (I believe it may be a valid question, but I'm just saying for flame sakes, because I'm pissed at all the anti-Lexus comments Ive read today.)