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BMW cycle sales stall – November 13, 2006

November 13, 2006
Filed under Features

The BMW Group expects to reach targeted volume, revenues and earnings for its motorcycle business in 2006, despite what company leaders describe as an “inconsistent market environment in the motorcycle segment” during the first nine months of the year.
BMW sold 23,230 motorcycles worldwide during the third quarter ended Sept. 30, 1.4 percent fewer than the 23,533 units sold during the same three-month period last year. Sales for the nine months ended Sept. 30 totaled 79,333 units, down 1.9 percent from 80,840 units sold during the first nine months of 2005.
Third-quarter revenues for the motorcycle segment rose by 2.2 percent to Euro 278 million ($353 million); pre-tax profit remained stable at the previous year’s level of Euro 4 million ($5.08 million); and the company’s production rose 9.1 percent to 22,279 units.
Motorcycle segment revenues for the nine-month period were down 0.3 percent to Euro 1.01 billion ($1.2 billion); pre-tax profit ticked up 1.1 percent to Euro 89 million ($113 million); and production climbed 6.4 percent to 83,350 units.
BMW says sales in the United States during the first nine months of the year fell 1.5 percent to 10,029 units. In Europe, sales fell 1.9 percent to 59,835 units. Sales were down 8 percent to 18,542 units in Germany, but up 7 percent to 12,203 units in Italy.
Further growth was realized in Spain, where sales rose 14.6 percent to 7,443 units; in Japan, where sales grew 12 percent to 2,021 units; and in South Africa, where the sale of 1,963 units accounted for 24.2 percent growth compared to the same period last year.
“The international motorcycle markets continue to perform inconsistently,” said Norbert Reithofer, chairman of the Board of Management of BMW AG. “While the markets in the USA and, above all, in Southern Europe, developed positively, growth rates in the Central European markets were either moderate or even negative.
“Two of the segments in which BMW is not represented, namely the segment below 750cc and, in particular, the supersport motorcycle segment, are both experiencing worldwide growth. In contrast, the tourer, sport tourer and sport segments are either stagnating or growing at moderate rates.”
BMW is entering new markets, however. At Intermot last month, the company introduced a new, three-model G 650 line-up “intended in particular to appeal to younger customers”; the powerful K 1200 R Sport; the Megamoto, a supermoto based on the HP2; and a new collection of performance parts.
Despite the questionable motorcycle market mixed with unfavorable hedging rates, the BMW Group believes it is headed for the best year in the company’s history, boosted by the sale of a record number of automobiles during the first nine months of the year as well as ongoing measures to raise efficiency and productivity.
Over the first nine months of the business year, the BMW Group increased pre-tax profit by 34.9 percent to a new record level of Euro 3.248 billion ($4.1 billion), which includes a first-quarter book gain of Euro 375 million ($476 million) from the partial settlement of an exchangeable bond on shares in the British engine manufacturer Rolls-Royce plc.
Even excluding the exceptional gain, the company’s earnings grew 9.5 percent to Euro 2.888 billion, with post-tax profit up by 32.5 percent to Euro 2.187 billion.
Revenue grew 6.2 percent to Euro 36.368 billion. Revenues were aided by sales of 1,021,534 BMW, MINI and Rolls-Royce vehicles, up 3.3 percent from 988,463 units sold during the first nine months of 2005.

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