FRANKFURT (Reuters) - BMW (DE:BMWG) said it would not sacrifice profitability in pursuit of leadership of the luxury car market, paving the way for Mercedes-Benz to overtake it as the top seller for the first time in 11 years.
BMW sold 932,041 of its own brand luxury cars in the first half compared with Daimler-owned (DE:DAIGn) Mercedes-Benz's 1,006,619 cars. While BMW said it still wants to remain the world's leading provider of premium vehicles, it would not do so at all costs.
"We are convinced that profitable growth means much more than just being number one in sales and volume, especially now that players in the premium segment are increasingly using price discounts to gain a competitive edge," the company's new Chief Executive Harald Krueger said on a call to discuss second-quarter results.
Chief Financial Officer Friedrich Eichiner said BMW Group, which owns the Rolls-Royce (LON:RR) and Mini brands would keep the title of market leader for a while longer if sales of "multiple brands" were taken into consideration.
Sales of BMW, Rolls-Royce and Mini vehicles increased by 5.7 percent in the second quarter, with demand for higher-profit offroaders helping to lift the operating margin at the automotive division to 9.5 percent in the quarter, from 8.4 percent a year earlier.
But BMW had faced pricing pressure, Eichiner said, with pricing taking a hit of about 40 to 50 basis points, when compared with the year-earlier period.
BMW's top brass took great pains to underline a track record of consistency, emphasising the fact that the car division's profitability margin has stayed above 8 percent for the 25th quarter in a row, a feat welcomed by analysts.
"We find it quite remarkable that BMW is effectively the most profitable and stable German premium carmaker despite lower mix and an older fleet compared to its peers in Ingolstadt and Stuttgart," analysts at Evercore ISI said in a note on Tuesday, referring to rivals Audi (DE:VOWG_p) and Mercedes.
The Munich-based car and motorbike manufacturer's earnings before interest and taxes (EBIT) rose 7.9 percent to 2.73 billion euros (£2.31 billion) in the quarter ended June, above the 2.65 billion euros forecast in a Reuters poll.
BMW's capital expenditure for property plant and equipment in the first half of 2016 fell to 1.042 billion euros, down from 1.616 billion euros in the year-earlier period, but would rise by year end, to pay for the launch of new models, the CFO said.
The carmaker did not provide quarterly figures for capital expenditure.
Sales of BMW's core brand reached 1.91 million in 2015, beating Mercedes-Benz which sold 1.87 million cars last year, and Audi which sold 1.80 luxury vehicles.