BMW nails it!

Whilst Honda and Ford don’t fare so well.

Despite a looming recession and dealer ‘strike’ in China, the world’s largest auto market, BMW has been able to post stunning first quarter profits that exceed the predictions of analysts by far. The Munich-based manufacturer of luxury up-market cars reported a jump in sales in both Europe and North America, particularly for their Sports Utility Vehicles (SUV) such as the X5 model.

Earnings before interest and tax (EBIT) increased by 21% from the same quarter a year ago to a total of €2.52 billion, which is not too shabby. This easily surpassed the €2.2 billion that was expected and the increase also outstripped BMW’s fierce rival, Daimler Benz, who returned a 9.2% growth.

“We have got off to a good start in 2015,” said Norbert Reithofer, the chairman of BMW’s board of management. “We are aiming to achieve solid growth in 2015, and hence new record figures for sales volume and profit before tax.”

BMW has introduced a slew of new models in the past few months and has even abandoned their ‘rear-wheel is best’ doctrine with the inclusion of the new BMW 2 series, a pseudo MPV with front-wheel-drive taken from the MINI platform.

BMW’s MINI unit also saw robust sales for the period, with sales of the three and five-door variants more than doubling. Not to be left out, the Motorcycle division also reached a new high and BMW forecast that this will also continue.

BMW is joined by Daimler Benz and Volkswagen in performing better than expected as European consumers have started to buy up-market cars again. This revival in local demand has been added to by increased sales outside the Euro-zone after the currency dropped significantly against the dollar and some other major currencies last year.

Japanese carmaker, Honda, has predicted a mere 0.4% increase in profit for the year, after results for last year failed to meet its expectations. Predicting a net profit of about US$4.4 billion for the twelve months to March 2016 – after last year’s miserable year of quality issues, recalls and missed product launch deadlines – Honda now faces the problem of not having a real large-sized SUV for sale in the US as cheaper fuel prices have once again boosted the demand for larger offerings in this segment.

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