BMW says it will miss its sales target

BMW underscored the troubles of the luxury car segment on Wednesday when the German premium car maker scrapped its sales targets for the next few years.

Norbert Reithofer, chief executive, said the carmaker would miss the 2012 sales target of 1.8m cars by more than 100,000, given the dire market conditions.

Ian Robertson, head of sales and marketing, told the Financial Times that it was also "highly unlikely" that BMW would reach its 1.6m sales target for 2010.

In the past year, BMW's sales dropped by 4.3 per cent to 1.44m units.

The reduced forecasts highlighted the plight of the world's premium carmakers. On a yearly basis, global car sales in the segment dropped by about 25 per cent in December, January and February.

This compares with a 20 per cent fall in the mass car market, reflecting how consumers are turning towards smaller and medium-sized cars in the wake of the economic crisis.

At the same time, German rival Audi, which can boast one of the newest model ranges in the industry, is close to overtaking BMW as the world's largest premium carmaker.

But Mr Reithofer pointed to a slew of upcoming new models, saying that the group continued to be the market leader and aimed to gain further market share.

Analysts pointed out that, in contrast to German premium carmakers Daimler and Audi, BMW had avoided piling up inventory of unsold cars. "They were much faster in cutting production than their rivals," Arndt Ellinghorst, analyst at Credit Suisse, said.

BMW reported a loss of €718m in the fourth quarter, as further provisions on residual values of leased cars and credit writedowns took their toll.

The company burned almost no cash in 2008, reflecting the fact that it did not pile up unsold cars. Its rival Daimler posted a negative free cash flow in its industrial business of almost €4bn in the past year.

"Liquidity and free cash flow are top priorities in such economic times," Mr Reithofer said, pointing to the €8.1bn net liquidity of the group at the end of 2008.

He refused to give a profit outlook for 2009 or to rule out a loss, but said it was a 'transition year".

The crisis could spur deeper co-operation with other carmakers, Mr Reithofer said, refusing to give further details. He added that BMW aimed to gradually expand its purchasing co-operation with Daimler.

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