BMW reported a record profit margin in its core automotive business for 2011.
The result nonetheless fell short of matching that of close rival Audi.
BMW's automotive segment boosted earnings before interest and tax (EBIT) as a percentage of revenue to 11.8 percent versus 8.0 percent a year before, but missed the 12.1 percent achieved by VW's premium brand.
Analysts had forecast an EBIT margin of 11.9 percent for the full year.
BMW, which is fending off efforts by Audi and Mercedes-Benz to take the premium segment's top sales spot, spent 500 million euros in the second half to introduce new versions of the 3-series sedan and 1-series compact.