While most of the car industry struggles in Europe and companies report severe earnings problems there, German-based BMW showed that, as the rich get richer, it can overcome deep problems in it home market. The wealthy in many corners of the world, particularly China, lifted BMW out of harm’s way in a triumph that even huge car companies like General Motors Co. (NYSE: GM) and Ford Motor Co. (NYSE: F) could not achieve.
The BMW Group posted robust third-quarter numbers. Revenues during the three-month period from July to September rose by 13.7% to €18,817 million. Net profit improved 16.0% to €1,289 million. The total number of BMW, Mini and Rolls-Royce brand vehicles delivered to customers during the third quarter increased by 9.0% to 434,963 units.
The BMW Group reported that it sold 359,103 units in Asia, an increase of 27.1%, in the nine months that ended in September. Sales in China during the same period improved by 33.3% to 237,650 units. In Japan, the number of cars sold rose by 21.5% to 42,038 units. The Japanese sales were in some ways more impressive than those in China because the third largest economy in the world based on GDP is in trouble.
China has been the promised land for global vehicle manufacturers since long before its moved ahead of the U.S. car market to become the world’s largest. However, the attraction has been so great that China has become crowded with overseas brands. Add to that the success of its home-based brands, and the fight for share has become a bloody one.
BMW mostly has stayed away from Chinese market challenges because it still sells cars and light trucks for huge premiums. The constant talk about the growing upper class in the People’s Republic gets some validation from BMW’s success there. And if that upper class grows as expected, BMW’s results should improve even more, so that Europe’s troubled economies become little more than a persistent nuisance.
BMW shows that a global vehicle manufacturer can be extremely successful, if it gets its product mix right.
Douglas A. McIntyre