BMW says demand from North America, China will drive growth

Dr. Norbert Reithofer, Chairman of the Board of

Dr. Norbert Reithofer, Chairman of the Board of Management, BMW Group, speaks with a new BMW X4 in the background during a news conference at the BMW manufacturing plant in Greer, S.C., Friday, March 28, 2014. (Credit: AP Photo/Chuck Burton)

Bayerische Motoren Werke AG, the world’s biggest maker of luxury autos, expects global demand for cars to rise this year, underpinning its goal to sell a record number of cars.

Rising demand in North America and China will pace the expansion, which will be supported by a European car market that shows signs of recovering from years of contraction, BMW said today in a statement distributed at the annual general meeting near the company’s headquarters in Munich.

“2014 will be a year of growth opportunities for the automotive industry,” even as volatility persists, Chief Executive Officer Norbert Reithofer said in a speech. “Everything is becoming more complex and more global.”


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BMW stuck to its forecast that annual group deliveries, including the Mini city-car nameplate and Rolls-Royce ultra- luxury marque, will exceed 2 million autos for the first time in 2014, two years earlier than planned. BMW has been pushing sales growth as it seeks to fend off Daimler AG’s Mercedes-Benz and Volkswagen AG’s Audi.

Investments to develop new models to woo more buyers caused earnings from carmaking to narrow to 9.5 percent of revenue in the first quarter from 9.9 percent a year earlier. The BMW brand has been the premium-car sales leader since overtaking Mercedes in 2005. Audi, which now ranks second, and Mercedes have each vowed take the top spot by the end of the decade.

Tighter Race

Backed by new compact models and the upgraded top-end S- Class luxury sedan, Stuttgart-based Mercedes cut BMW’s lead in the first four months of 2014 by 12 percent from a year earlier to about 61,750 deliveries, according to figures the companies released in the past week. Mercedes is rolling out 30 autos by the end of the decade, including a dozen all-new cars.

In its bid to surpass BMW and grab the top rank for the first time, Ingolstadt-based Audi will introduce 17 new or revamped vehicles in 2014, including a remake of the iconic TT sports car. The VW unit trailed BMW by 7,200 cars through April, compared with a lag of about 9,000 deliveries a year ago.

To maintain the top industry spot, BMW is rolling out new models including the 4-Series coupe, the X4 SUV, the van-like 2- Series Active Tourer and the i8 plug-in hybrid sports car. First-quarter investments by BMW in new products and equipment rose 1.6 percent to 1.24 billion euros, with research-and- development spending increasing 4.2 percent to 993 million euros.

Investments Necessary

Reithofer today reiterated a forecast of a significant gain in pretax profit this year as 16 new and refreshed models lift deliveries.

“Investment secure our future,” said Reithofer. “Our economic success, innovation and financial strength provide us with the latitude we need to make those investments.”

BMW shareholders at today’s meeting will vote on raising dividends 4 percent to a record 2.60 euros per common share and 2.62 euros per preferred share. That translates into an unchanged payout ratio of 32 percent of net income, at the lower end of a target corridor of 30 percent to 40 percent. Investors are poised to approve the proposal as the Quandt and Klatten families control 46.7 percent of BMW voting stock.

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