BMW drives ahead on China’s craving for luxury as Toyota sales hit by quake

City A.M. Reporter
BMW yesterday tore through market expectations for second-quarter profits as more wealthy Chinese drove away with its revamped 5 Series saloon car.

The company reported an 83 per cent jump in quarterly operating profit at its luxury car business, underpinned by surging sales of the 5 series and a 4.8 percentage point widening in its operating margin to 14.4 per cent.

Although BMW is enjoying a golden year for profits, like Mercedes and Audi, the carmaker tempered expectations by predicting a return in the longer term to margins of 8-10 percent. Bernstein analyst Max Warburton called the results “quite simply awesome” as BMW came in third only to luxury sports car makers Porsche and Ferrari in terms of sheer earnings power in the car industry.

Meanwhile Toyota reported a 99 per cent drop in quarterly profits because of the impact of March’s Japanese earthquake and tsunami. Net profit for the three months to the end of June fell to 1.1bn yen (£8.7m) from 190.4bn yen last year.

Toyota was hit by a shortage of parts around the world due to the damage caused to Japan’s supply chain by the natural disasters. Despite falling first quarter sales, Toyota increased its forecast for full-year sales and profits. It said it was recovering from the tsunami faster than expected, and raised its full-year profit forecast.