BMW aims to sell 2 million cars by 2016, eyes 8-10 per cent profits

Saturday 24 March 2012, 09:32 AM by

Despite the stiff competition it faces from competitors like Audi and Mercedes Benz in the international market, BMW has successfully held on to the position of the world's biggest car maker. The strong position it enjoys in the global arena has enabled the leading German luxury car manufacturer to project sales target of 2 million units by 2016. This is a huge sales forecast as it was earlier anticipated that the company would achieve this figure in 2020. It had sold a total of 1.67 million cars in the international arena in 2011.

This sales projection would include the cars sold under the BMW, MINI and Rolls Royce brands that the company owns. With such high sales predictions, the manufacturer has upped the ante for Skoda's Audi, which has said that it will sell 1.5 million cars before the end of 2015. The two automotive giants are banking on the potential of emerging BRIKT markets, which include Brazil, Russia, India, South Korea and Turkey, to achieve their respective sales targets. Since 2000, these markets have shown tremendous growth, going from annual sales of 8,000 units to 1,00,000 units.

At the official annual press conference held in March 2012, BMW said that it will bolster manufacturing capacity in countries like US, China, India and South Africa. It is also eyeing operating profit margin of approximately 8-10 per cent, a respectable figure considering the greater investments and costs involved in enhancing engine efficiency and increasing international production prowess.

Notably, Audi has overtaken BMW in terms of profitability due to economies of scale it has with Skoda, a benefit that BMW does not enjoy as an independently operating manufacturer. Audi is already ahead of competitor Mercedes Benz in terms of sales on the global platform, which may be a cause of worry for BMW.

According to Chief Executive of BMW, Norbert Reithofer, “We are increasing our production capacity in China, the USA, South Africa and India, while at the same time evaluating potential production locations in the BRIKT markets.” The company is also awaiting the confirmation of some favourable policies in Brazil before it starts jumpstarting manufacturing in the South American nation. China, another emerging economy, is already the third biggest market for BMW, just behind USA and Germany.

BMW is trying to keep complexities to a minimum and restricting itself to just one core series of engines. Likewise, it will only have two types of vehicle architectures in the future, one for front wheel drive models and the other for rear wheel drive cars. The front wheel drive system will be seen in the new iteration of the MINI Cooper, which will be ready for production by the year 2013. Along with this, the company is also working on developing a big Multi Purpose Vehicle (MPV) by 2014 that will be pitted against the Mercedes Benz B Class.