BMW CEO pushes electric cars, relies on luxury models for funds
Thu Mar 17, 2016 03:46:pm Business
4.2K By sosa hills
BMW AG Chief Executive Officer Harald Krueger vowed to push the carmaker deeper into the market for electric cars and accelerate the introduction of self-driving features, while broadening the range of lucrative luxury models that will help fund his strategy.
Krueger laid out the plan in his first major review since becoming CEO last year. Novelties include the introduction of more sport utility vehicles, including the full-sized X7, as well as more versions of high-end models like the new 7-Series flagship sedan, Krueger said Wednesday in Munich, where the company is based.
A decade after taking the top spot in the global luxury car market, BMW is at a crossroads. Years of rolling out new models ranging from coupe like SUVs to seven seat wagons have left the company with few niches that could spur growth. Rival Daimler AG has a chance to reclaim the crown as early as this year after catching up to BMW with a slew of new models and upgrades of its bestsellers.
"It's going to be difficult for BMW to grow into new segments in future, after they were the leaders here for many years," said Sascha Gommel, a Frankfurt-based analyst at Commerzbank, who advises investors hold BMW stock.
The two pronged approach built around advanced cars and a broadening out of the existing range aims to help BMW maintain pretax profit margins at a minimum of 10 percent through 2020. BMW predicted another year of record sales volumes, revenue and earnings, while group earnings will rise only slightly, compared with a forecast of solid growth last year. Revenue from the automaking segment will grow slightly, the company said, compared with a significant increase last year.
BMW rose as much as 3.34 euros, or 4.2 percent, to 82.90 euros, and traded at 82.53 euros at 10:14 a.m. in Frankfurt. The stock has lost 17 percent this year, compared with 13 percent decline at Daimler in the period.
Krueger laid out the plan in his first major review since becoming CEO last year. Novelties include the introduction of more sport utility vehicles, including the full-sized X7, as well as more versions of high-end models like the new 7-Series flagship sedan, Krueger said Wednesday in Munich, where the company is based.
A decade after taking the top spot in the global luxury car market, BMW is at a crossroads. Years of rolling out new models ranging from coupe like SUVs to seven seat wagons have left the company with few niches that could spur growth. Rival Daimler AG has a chance to reclaim the crown as early as this year after catching up to BMW with a slew of new models and upgrades of its bestsellers.
"It's going to be difficult for BMW to grow into new segments in future, after they were the leaders here for many years," said Sascha Gommel, a Frankfurt-based analyst at Commerzbank, who advises investors hold BMW stock.
The two pronged approach built around advanced cars and a broadening out of the existing range aims to help BMW maintain pretax profit margins at a minimum of 10 percent through 2020. BMW predicted another year of record sales volumes, revenue and earnings, while group earnings will rise only slightly, compared with a forecast of solid growth last year. Revenue from the automaking segment will grow slightly, the company said, compared with a significant increase last year.
BMW rose as much as 3.34 euros, or 4.2 percent, to 82.90 euros, and traded at 82.53 euros at 10:14 a.m. in Frankfurt. The stock has lost 17 percent this year, compared with 13 percent decline at Daimler in the period.
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