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BMW loses cruise control


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BMW loses cruise control

For the first time, German carmaker BMW says it is beginning to feel some headwinds in Europe, and that has spooked investors.

Despite the latest quarterly results beating forecasts, BMW’s shares have had a rough ride in Frankfurt. The share closed down 0.68% on a DAX index that closed up 0.7%.

It flies in the face of the world’s number one luxury motor brand’s posting record profits and revenue in the third quarter. This was mainly due to a sales explosion in China, up 40%.

But investors focussed on BMW’s EBIT margins
which have fallen more than expected over the year. Profitability has been hit by development costs in Brazil and by discounts offered to European consumers, from whom BMW gets half of all sales.

Competition has been fierce in the European market where new car sales are expected to be down by between 8-10% this year, the worst decline in 20 years.

BMW says it is aware of the situation, but reiterated its full-year forecasts for record 2012 results. Despite the day’s dip, the share has still put on 25% this year.

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