SUV demand pushes BMW profit up 2.6%

BMW, the world's biggest maker of luxury cars, said first-quarter profit rose 2.6 per cent as growth in demand for its sport-utility vehicles helped make up for added investments in expansion.

Earnings before interest and taxes (Ebit) increased to €2.09 billion from €2.04 billion a year earlier, the company said yesterday in a statement.

Profit exceeded analyst estimates. Revenue gained 3.9 per cent to €18.2 billion.

The BMW brand retained the top post in global luxury sales over Volkswagen's Audi and Daimler's Mercedes-Benz in the quarter with a 12 per cent jump in deliveries. The German rivals, which rank number two and three respectively, have each vowed take the lead by the end of the decade.

BMW is responding by adding models, and the spending led quarterly Ebit from car making to narrow to 9.5 per cent of sales from 9.9 per cent a year earlier.

Investments in new products and equipment during the quarter rose 1.6 per cent to €1.24 billion, with research and development spending increasing 4.2 per cent to €993 million.

The three German manufacturers are facing a challenge from smaller producers of upscale vehicles, including Tata Motors' Jaguar Land Rover and Fiat's Maserati, which are adding models to lure customers and grab a bigger chunk of this lucrative market segment.

Fiat Chrysler expansion
Fiat Chrysler is betting on a breakneck expansion of its upmarket Alfa Romeo, Jeep and Maserati brands to transform itself into a global car making powerhouse within five years.

The newly merged group yesterday outlined a long-awaited business plan, aiming to revive its historic car making names and persuade investors it can overcome high debt, an uncertain market backdrop and past missteps to close the gap on industry leaders such as Volkswagen and Toyota. – (Reuters/Bloomberg)