BMW vows to top luxury market as Mercedes’ sales lag

BMW AG has pledged to remain the world’s leading luxury-vehicle maker after being usurped by Mercedes-Benz in the first half.

Highlighting the importance of new models such as the revamped BMW 5 series coming in 2017, the organisation promised to struggle to maintain the leading position.

“BMW will struggle to maintain the leading position by sales because they don’t have any obvious blockbusters coming this year,” An analyst with Commerzbank AG in Frankfurt Sascha Gommel told newsmen.

BMW is at a comparatively weak point in its product cycle. It is preparing for next year’s remake of the 5-series sedan, which competes with the Mercedes E class that went on sale in March.

Another challenge has been U.S. customers’ shift towards SUVs, which has led to deeper discounts on the sedans at the core of BMW’s lineup.

The carmaker’s U.S. sales dropped nine percent in the first six months, more than 9,000 vehicles behind Mercedes.

BMW has said it will focus on profitability as it invests in technology, such as self-driving features, to compete with new rivals including Uber Technologies Inc. and Tesla Motors Inc.

The company has promised to introduce a car capable of driving itself by 2021, working with partners Intel Corp. and Mobileye NV, and today highlighted an 87 percent first-half increase in the sales of its electric models.

The group, which includes the BMW, Mini and Rolls-Royce brands, is “firmly intent” on remaining the world’s leading luxury-vehicle manufacturer this year, BMW said in a statement.

Second-quarter earnings before interest and tax rose to 2.73 billion euros ($3.05 billion) from 2.53 billion euros a year earlier.

BMW kept a tight hold on costs to offset a reliance on less-expensive vehicles such as the X1 compact SUV to boost sales.

The result comes after Daimler and Volkswagen AG beat expectations with earnings that excluded one-time costs. BMW’s figures included 472 million euros in warranty provisions, among them the cost of recalling vehicles with Takata Corp. airbags.

BMW’s return on sales from car making was 9.5 per cent, compared with 8.4 per cent in the same quarter last year.

That compares with an operating profit margin of 10 per cent for Mercedes and 7.6 per cent for Volkswagen’s Audi.

BMW confirmed its forecast of slight increases in deliveries and profit before tax this year, with a profit margin from car making between 8 per cent and 10 per cent.