Some Big Emerging Markets Hit 60 Per Cent Sales Increases
“probably the world will be more volatile in the next five years than it’s been in its history”
For a company doing all the right things and enjoying huge success, BMW is doing its best to dampen down expectations a bit with talk of unprecedented volatility and caution.
Yes, the U.S. car market is performing well at the moment, with BMW sales rising at between 10 and 15 per cent.
“But until the (American) consumer feels more confident because of unemployment and the housing market we won’t be seeing a return to sales of 17 million, more like 12-1/2 to 13 million this year,” said BMW Marketing Director Ian Robertson.
“There are a number of economic indicators in the U.S. that tell us we should be more cautious. Unemployment is not coming down, and the housing market is not recovering.
At a press briefing in London, Robertson repeatedly warned of the dangers presented by “volatility” and “uncertainty” in markets across the world.
“We are cautious looking forward, but we are enjoying a lot of success at the moment, and we believe we have the right strategy. Probably, probably the world will be more volatile in the next five years than it’s been in its history,” Robertson said.
In July BMW raised its sales forecast for 2011 by 10 per cent to 1.6 million vehicles, and said its profits would hit an EBIT (earnings before interest and tax) rate of 10 per cent. In May, BMW had said EBIT would exceed eight per cent in 2011. BMW has said it hopes sales will hit two million a year by 2020, but last month a German magazine reckoned this target would be reached early, in 2016.
Robertson said BMW’s success was helped by its decision to spread its marketing efforts across the world rather than concentrating on particular areas. Nevertheless, emerging markets had been exceptionally successful.
“Markets including China, Brazil, South Korea and Turkey are exhibiting sales growth of 60 per cent or more,” he said.
Looking at Volt-like solutions
BMW was responding to potential volatility in the world by manufacturing its vehicles where its customers were. The exchange rate between the euro and the dollar was becoming impossible to predict.
BMW is launching a small battery-electric city car, the carbon fiber i3, and the i8 plug-in hybrid sports car, and already sells hybrid powered cars. What did BMW think of General Motors’ solution, the extended range electric Chevrolet Volt? Robertson said BMW would be looking at this option too.
The alliance between Renault of France and Nissan of Japan have bet their future on battery-only cars capturing 10 per cent of global vehicle sales by 2020, while other manufacturers thought this might account for only one or two per cent of the market. What was BMW’s prediction?
“This could be three, four, five or maybe six per cent of the total market,” Robertson said.
But 50 per cent of the market could use some form of electrical, non combustion engine power for limited ranges.
“Internal combustion engines will be dominant, but the development of those (competing) technologies have a high priority for a company like ours,” Robertson said.
Neil Winton – August 1, 2011
No comments yet.