BMW Continues to Grow in U.S., Globally

DETROIT August 30, 2004; John Porretto writing for the AP reported that German automaker BMW Group expects the United States to be its top global market for new vehicles in 2004, cashing in on an expanded portfolio that continues to grow, the company's chairman said Monday.

Helmut Panke, speaking at a luncheon to automotive journalists, said he remains bullish on the U.S. and global automotive markets despite heavy competition and the tendency of some in the industry "to see more problems than opportunities."

So far this year, while several European brands have struggled, BMW has posted strong results, helped largely by sport utility vehicle demand.

"We've been able to continually build our presence in this market to the point that last year, the U.S. became our biggest single market for the first time in our history," Panke said. "As things stand at present, it looks as if it will remain so this year."

For the first seven months of 2004, BMW sold 147,313 vehicles in the United States, a 4 percent increase from 2003, according to Autodata Corp. Including the Mini and Rolls Royce nameplates, total sales for the BMW Group were up 3.5 percent for the period.

Among European brands, only Volkswagen sold more vehicles for the same period -- 151,934 -- though VW's U.S. sales were off 11.5 percent through July. Mercedes-Benz was third with 122,130 U.S. sales, 2 percent off from a year ago, Autodata reported.

Altogether, European brands' U.S. sales were off 3.8 percent for the first seven months of the year.

Panke said he expects BMW to increase its share of the U.S. market from 1.7 percent to 2 percent "in the foreseeable future," though he wasn't specific. That would still be far below the portion of the market held at the end of July by the top Japanese competitors: Toyota (12.1 percent), Honda (8.2 percent) and Nissan (5.7 percent.)

Worldwide, BMW Group's sales were up 8.5 percent for the first half of 2004, and its bottom line reflected the growth. BMW said earlier this month its second-quarter profit rose 18 percent from a year ago as new models such as the X3 SUV and 6-Series helped drive sales.

New versions of the Mini and the new BMW 1-Series -- small cars designed to compete with VW's popular Golf -- are expected to help lift sales in the second half of the year.

In a recent report, Merrill Lynch analyst John Casesa said BMW is at the high end of major automakers for spending on capital expenditures and research and development. Casesa said BMW, aided by high margins and its premium revenue position, spends about 15 percent of its revenue on capital expenditures and R&D -- about 6 percent more than the industry average.

"The European (brands) -- BMW, Porsche and Volkswagen -- continue to offer attractive, highly valued and differentiated products for the world's richest auto market," Casesa said. "Each company's tactics vary, but all three are likely to continue to expand U.S. product offerings."

Panke cited BMW's decision in 1992 to build a manufacturing plant in Spartanburg, S.C., as an important contributor to its success in the United States and abroad.

The automaker has invested $2 billion in the plant, where it builds all X5 SUVs and Z4 roadsters. BMW produced roughly 160,000 vehicles in South Carolina last year -- nearly 100,000 of which were shipped outside the United States.

Such a strategy has allowed BMW to shield itself from the effects of the stronger euro, which has hurt other German exporters.