2013 Audi A3

BMW profit drops 89%

 
3 2,377 views Mar 12, 2009

“What’s wrong here? You like working with us. You appreciate your job. But you drive a vehicle from a competitor?”

“What’s wrong here? You like working with us. You appreciate your job. But you drive a vehicle from a competitor?”

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While German luxury rival Audi is posting record profits and sales, BMW’s performance is looking much more sour with the company announcing today that its profits have dropped 89% over the past 12 months. BMW still managed to earn a net annual profit of €330 million but analysts were expecting a figure around the €1.02 billion mark.

No carmaker has been immune from the global economic crisis, and nowhere is this more evident than in the U.S. where BMW sales dropped 37% to reach a 28-year low. Europe, BMW’s traditional stronghold, saw sales drop 27%. Compiled with downturns all around the globe, BMW’s revenues dropped to €53.2 billion, down 5% on last year’s levels, with sales for all brands (including Rolls-Royce and Mini) totally 1,439,918 units.

The news isn’t all bad. Part of BMW’s low profits was the result of several exceptional items recorded in the fourth quarter of 2008, and the company has already set about changing its strategies.

BMW has initiated a far-reaching program, called ‘Number One’, aimed at streamlining costs and restoring the company's efficiency. This includes changing its U.S. strategy to focus on profitability rather than sales volume, after experiencing higher risk provisions and allowances for residual value risks and bad debts relating to its financial services business, and worldwide jobs have been reduced by 7% (roughly 7,499 employees).



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Comments (3)

  1. ma_samuelesm avatar samuelesm Posted: 3/12/2009 7:01pm PDT

    BMW should have some changes in management or business.
     
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  2. ma_HECTOR avatar HECTOR Posted: 3/13/2009 3:43am PDT

    Perhaps now is a good time to look back and see all those years of flame surfacing, of putting the gear stalk on the steering column, of the 1 series, of blinding and useless daytime running lights and of the Mini SUV... among other sins against traditional coachbuilding that made BWM great.

    Time to pay the piper and they haven't done enough of that IMO.
     
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  3. ma_DavidSilverM3 avatar DavidSilverM3 Posted: 3/13/2009 5:43am PDT

    I have some inside perspective regarding BMW and I can say that BMW management was already well aware of the problem in the summer of '08. Proper steps have already been taken to insure profitability in the future.
     
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