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BMW reveals future model plans

2007-09-27 18:24

William Ickes

Frankfurt - German luxury carmaker BMW unveiled its long-awaited long-term strategy on Thursday, predicting it would sell "clearly more than two million vehicles" a year by 2020 and save €6bn by 2012.

BMW sold a record 1.37 million motorcycles and automobiles under the BMW, Mini and Rolls-Royce brands in 2006.

Increased productivity of at least 5% per year should allow the group to "tap approximately €6bn in efficiency potential by 2012," a statement said.

Shareholders were told the luxury car group would dole out a "significantly higher dividend" this year and possibly present a share buyback plan some time after the next 12 months.

Chairman Norbert Reithofer told a press conference in Munich, southern Germany, that BMW was open to acquisitions and that it had considered buying a car brand from its rivals, but that none currently met its criteria.

"Acquisitions in principle remain on our agenda," Reithofer added, though not for the next 12 months at least.

"For possible acquisitions in the future, we have clearly defined criteria in the strategy process. That way, we can act swiftly when needed," he said.

Reithofer said BMW would increase production capacity at its US plant in Spartanburg, South Carolina to 240 000 units annually as a way of offsetting the euro's rise against the dollar.

The capacity of the Mini plant in Oxford, Britain would be raised to 260 000 units, while in China, steps were being taken to increase output from the current 30 000 to 44 000 units, he said.

The BMW statement also said the Mini brand would offer a "sports activity vehicle" and confirmed the parent group would produce the BMW X1 SAV.

A four-door Gran Turismo model based on a concept car presented in Shanghai recently would also go into production, the German group said.

In its statement, Reithofer was quoted as saying: "We will focus the entire organisation on the return on capital." The group is aiming for a profit margin of between 8% and 10% percent by 2012 on sales of at least 1.8 million automobiles and 150 000 motorcycles.

Analysts say BMW must act decisively to maintain record sales while facing the challenges of cutting carbon dioxide emissions, higher commodity prices and the effects of a stronger euro.

The German group is banking on its strong position in the luxury car market, which it forecast would "increase by about 40% between 2005 and 2019, compared to an increase of just under 20 percent for the mass segment."

Its Rolls-Royce brand will roll out an additional, less-expensive model, and the motorcycle division will offer new bikes with BMW and Husqvarna nameplates.

Finally, through increased productivity, BMW said it "expects to be able to acheive the growth planned for the period until 2012 with roughly the same level of personnel as today."

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