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BMW bets on SUVs to lift profit and pay for electric car shift

One in three BMW cars built last year was an SUV as firm ramps up production capacity

Earlier this month, BMW reported preliminary 2016 financial results, with earnings before interest and tax (Ebit) down 2.2 per cent at €9.39 billion even as revenues rose to a record €4.16 billion. Photograph: Focke Strangmann/EPA

Tue Mar 21 2017 - 15:47

German car maker BMW plans to ramp up production of profitable sport-utility vehicles (SUVs) to boost earnings this year and help fund the rollout of a mass production system for electric cars, it said on Tuesday.

“The fully electric drivetrain will be integrated into our core brands,” chief executive Harald Krueger told a news conference, adding zero-emissions cars would now be built on BMW’s main production system, rather than on a separate, low-volume production line.

Even local production in China is being readied to make batteries and electric powertrains, BMW said, adding the level of production would be decided once China’s electric cars policy has been clarified.

Earlier this month, BMW reported preliminary 2016 financial results, with earnings before interest and tax (Ebit) down 2.2 per cent at €9.39 billion even as revenues rose to a record €4.16 billion.

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Every third BMW car built last year was an SUV, a market that is growing so fast the company is increasing production capacity and adding an X7 version to its line-up.

But BMW also took a €380 million hit on residual values – or leased and financed vehicle resale values – in 2016, mainly because US customers are abandoning sedans for larger four-wheel drives. Sales of BMW cars fell in the United States last year, but are expected to grow slightly this year.

BMW's namesake brand, long the world's top-selling luxury car maker, sold fewer cars than German rival Mercedes-Benz last year, and the company said on Tuesday it would look to recapture the industry lead, but not at all costs. – (Reuters)

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