Is BMW Losing Out in the Profits Race to its Rivals?

That's what happens when you go downmarket, it takes more than a badge to sell a car (inferior engine technology and crappy looks don't help either since customers in these segments actually have brains).

More talk about a BMW getting taken over. So much for being independent.

— huu76 (View Profile)

Posted on 3/26/2007 11:23:02 AM | reply to this comment | Votes: -10   

I hope they sort this out quickly..... GO BMW!

— M53R (View Profile)

Posted on 3/26/2007 12:25:29 PM | reply to this comment | Votes: 4   

I hope they sort this out quickly..... GO BMW!

— M53R (View Profile)

Posted on 3/26/2007 12:25:29 PM | reply to this comment | Votes: 4   

I really do not agree with this article, i mean BMW is selling more cars AND making more money, and i did the math, only to find that the ratio profits/car has increased in 2006. As for others catching up, well maybe Audi is, but that does not necessarily imply that BMW is losing money, it can be that Audi has had a higher increase of its profits/car ratio than BMW, but that, all be it good news for Audi, does not mean BMW is going, down, and btw, on a lighter note, they never will if they keep making cars like they do...

— nvme (View Profile)

Posted on 3/26/2007 12:48:28 PM | reply to this comment | Votes: 8   

They should look to Toyota for some help with a Hybrid engine. Also, please do not go downmarket in North America with a car like the 1 series. Their "premium" image will take a hit even more for the sake of low-end sales. You don't see Lexus introducing "cheaper cars" that might alter their prestige factor.

— david999 (View Profile)

Posted on 3/26/2007 12:59:44 PM | reply to this comment | Votes: -11   

Sounds like this article was funded by some disgruntled and jealous employees over at Audi AG.

— Zackary (View Profile)

Posted on 3/26/2007 1:02:03 PM | reply to this comment | Votes: 4   

Every other luxury brand splits its development costs with its parent company. BMW can't borrow Daddy's money it has to do its own work.

— Autoegr525 (View Profile)

Posted on 3/26/2007 1:22:59 PM | reply to this comment | Votes: 5   

If you look at the financial results of the three German automakers you will wonder what the gripes is all about.
Looking at the last three years:
-----------------------------------2004-------2005---------2006
BMW Rev(bill Euro)------------44.34-------46.66--------49.00
MB Rev(bil Euro)---------------49.63-------50.02--------54.58
Audi Rev(bil Euro)--------------24.51------26.59--------31.14
BMW Profit(bil Euro)-----------2.24--------2.24----------2.87
MB Profit(bil Euro)--------------1.67--------(0.51)-------2.41
Audi Proft (bil Euro)------------0.87--------0.82---------1.34
BMW R&D (bil Euro)-----------2.33---------2.46---------2.54
MB R&D (bil Euro)-------------2.63---------2.42---------2.18
Audi R&D(bil Euro)------------1.21---------1.59---------1.98.

So BMW still has healthy profit margins, Audi is the biggest spender of R&D as a percentage of Revenue. Both Audi and BMW are increasing their R&D while MB is cutting back on R&D to prop up profit it may seem.

So the article is a bit misleading in my limited opinion

— AdmiralT20 (View Profile)

Posted on 3/26/2007 2:49:40 PM | reply to this comment | Votes: 8   

admiral thanks for those true facts, read this article on detorit auto news, I could understand what this journalist was saying. How could record setting profits receive such bad press, Just imagine if BMW was not profitable how much bad press they would receive. BMW fans have to remember jealousy comes with success, you can judge how successful BMW is buy looking at the imitation products of other car makers, Lexus, Infinti, Audi, Cadillac, Acura etc. Imitation is the sincerest form of flattery.

— Larry (View Profile)

Posted on 3/26/2007 6:30:24 PM | reply to this comment | Votes: -1   

sailor, BMW profit is not going down according to the Admiral post it BMW profit boosted from 2.24 to 2.87, it right on screen spelled out and you can get that right , Sailor a BMW hater who can not accept the BMW success. Admiral could not have posted any clearer. people believe what they want to believe facts or not.

— Larry (View Profile)

Posted on 3/26/2007 6:39:15 PM | reply to this comment | Votes: -2   

what is ur problem with BMW? VW is making money on its own, and if anything, it's Porsche's money that is holding VW, because unlike Audi, they are about to get 30% shares in the VAG group!
don't get me wrong i love Audi but is the second most profitable independant car maker in the world, after Porsche, and Audi's recent Thriving is based on the making their cars according to BMW's philosophy, Ultimate Driving machine, as opposed to what they used to do before, that, which is to try to copy mercedes. They have understood that being associated with BMW is a good strategy. Infiniti, and lexus recently understood that too, and eventhough i don't really like what they do, i still applaud their efforts - i don't want to get the shit about Hybrid, because that is Toyota, brand-name-wise i mean, and it still is a niche market...-
BMWs have a heart instead of an engine, pumping blood and soul instead of fuel, and the only competition here is from Ferrari!

— nvme (View Profile)

Posted on 3/27/2007 8:51:29 AM | reply to this comment | Votes: 1   

Guys, The title is just a bit misleading. BMW is very profitable and has increased its "total" profit every year, but the article is zeroing in on its profit margins (i.e., cash left over per car after cost of materials) which has gone down a bit. This could mean many things, but in simple terms:
1) they are lowering their overall sale prices (i.e., lower markups..incentives etc..)
2) Their cost of producing each car has gone up.
3) Everything is basically, the same, but they now sell many more high volume/lower profit per car models (mini and 1 series come to mind) that are consequently diluting their overall "margins per car". Depending on their strategy, sales goals etc.. its not necessarily a bad thing if the slide stabilizes, but if the trend continues.. they'll have a problem. In the short term, I don't see this as an issue unless Audi & merc are increasing sales and selling a similar mix of models while maintaining much healthier margins..

— TheGenius (View Profile)

Posted on 3/26/2007 9:28:23 PM | reply to this comment | Votes: 5   

yea, Caltrans I'm clueless driving a BMW/Mercedes authentic rear wheel drive, sports coupe, while you dream of your front trak rebadged beetle/golf/toureg/polo cheap engineered Audi. AdimiralT20 post shows how far Audi is from the Big boys, keep dreaming caltrans.

— Larry (View Profile)

Posted on 3/26/2007 11:24:53 PM | reply to this comment | Votes: 2   

TheGenius is on the money with his comments.

— david999 (View Profile)

Posted on 3/27/2007 9:43:59 AM | reply to this comment | Votes: 2   

What good is R&D when all they can come up with is a bicycle light generator?

BMW can get 10-15% margins if they cut the materials etc. in their cars (which from the looks of it, they've already done).

I was in Toronto again yesterday and again the IS outnumbered the 3. I'm really looking forward to updated sales numbers. If what I see is what's happening in N.America overall, BMW is going to be facing some hardships.

Look at a March 2005 Motortrend, I just happened to stumble across it today and it had the M35 and Acura RL outmatching the 5, A6, STS and S-Type. Don't know if they've done any more comparisons, but it sort of tells you something. They complained how the new 5's steering system wasn't as good as the previous one.

Admiral,
Still doesn't compare to Toyota's numbers. Toyota has revenue of 179 billion and 12 billion in profit. Basically they hade 40% more revenue but had 2x the net profit.

Larry,
Wasn't it BMW that just sold some big chunk of RR or something last year (one time revenue)? Maybe it was Audi. There was an article on here a few weeks back.

— huu76 (View Profile)

Posted on 3/27/2007 11:51:05 AM | reply to this comment | Votes: -1   

Really momar,
Name some intersections. Where's Ryerson University? Where's George Brown College? How many UofT and Centennial campuses are there? What's the current budget deficit of Toronto? Better yet, who's Alan Tonks, Barbara Hall, Case Ootes, Tartu house? Which bank doesn't have its HQ downtown? Some stuff you can't find on map.

I find it hard to believe after all this time that all of a sudden you live in Toronto.

Where does Thornhill end and Richmond Hill start? What are they building at Yonge/Dundas right now. I want the actual name of the project. What major radio station is in Etobicoke? Can you even pronounce that properly? Who used to be on Much and now is on an entertainment show?

What is on the NW corner of Meadowvale and Sheppard? What's just north of that?

Since you ride along the 401 everyday, this should be simple. What and where is the basketweave. You can even look that up. Where is the last Crispy Creme in the GTA? What two major buildings are on the West side of Yonge and Major Mack?

What's the name of the police officer who was stabbed to death about 15 years ago and now has a street named after him. Where is the street? What city/town has Liberty St as its main street? Where are the 2 Playdiums? Paramount has significance for two reasons. What are they?

If you can get 3, I'd be impressed.

Feel free to ask me some GTA trivia.

— huu76 (View Profile)

Posted on 3/27/2007 5:27:37 PM | reply to this comment | Votes: -1   

If someone's going to talk the talk, they'd better be able to walk the walk.

It's easy when you know what you're talking about.

— huu76 (View Profile)

Posted on 3/28/2007 9:38:51 PM | reply to this comment | Votes: -1   

That separates the real posters from the pretenders. I'm looking at you Sailor.

— huu76 (View Profile)

Posted on 3/28/2007 9:39:44 PM | reply to this comment | Votes: 0   

Well then, I'm throwing rocks.

— huu76 (View Profile)

Posted on 3/29/2007 8:08:56 PM | reply to this comment | Votes: 0