Profits more important than car sales for BMW

Profits will always be more important than being the world’s biggest premium carmaker for BMW, according to sales and marketing boss Ian Robertson (pictured), after the firm slipped from first to third in the sales race against Mercedes-Benz and Audi in the opening months of 2016.

Mercedes sales, in particular, have surged, rising up to 20% year-on-year off the back of strong demand in China. BMW’s growth rate, meanwhile, has exceeded that of Audi, but the latter is still selling more cars.

“Profits have always been our guiding light, and our consistency in that field bears testament to that. But within that, there is always the challenge of balancing the equation between profit, volume and residual values. If I’m honest we’re not 100% where we want to be,” said Robertson.

“But a lot of that is down to some clear, profit-led decisions we’ve taken. In Russia, where the currency has halved in value, we’ve stopped selling our smaller cars. That’s a profit decision that some of our rivals haven’t taken. Likewise, we are more active in some European fleet markets than others. The appeal of volume is that it is a multiplier of other savings - if you have volume you can use it to drive profits in other ways. But it can also risk profits. We have a team of people monitoring it, and it is not an easy equation, but profits must always guide our decisions,” he added.

Robertson also highlighted the importance of residual values in setting lease rates and cautioned that over-aggressive discounting would have a long-term negative impact on that, eventually driving the lease rates up again.

“Premium brands do have an inherent advantage in being more desirable,” he said. “I’m not in a position to talk about the strategy of our rivals, but I do know that I am happy with where our residual value predictions are, and you do have to balance out volume gains against long-term knock-on effects.”