BMW head Helmut Panke talks about premium car values, sales records and targeted return on investment

Munich. BMW group's 2003 profit of 3.2 billion euros was 2.8 percent below the previous year's record result but the group plans to reach new records for unit sales and profit in 2004.

Automobilwoche spoke to BMW CEO Helmut Panke about the corporation's current situation and the brand's planned model and market offensive.

Mr. Panke, at the BMW general meeting you will recommend increasing the dividend. This step is quite surprising in view of the industry's situation.

We should not talk about the industry's situation or the economy. Every company develops individually and follows its own path. Generally the world auto market moves about on a high level. Regarding the increase of the dividend, we reached our targets in 2003. First of all, we made significant steps regarding our product and market offensive. Secondly, we reached our sales and profit targets. And last but not least, we managed to strengthen the company capital, according to plan. We are positive about our future. We believe that the recommended dividend increase is a logical step.

Does the slow start of the new Volkswagen Golf make you worry that the new 1 series will not reach its targets?

No, we are talking about two totally different segments. While the Golf, which is an outstanding representative of the high-volume market, has evolved over the years through many different technical solutions, it remains part of the volume segment. We are convinced the 1 series is positioned differently due to its higher quality and its completely different concept, which is characterized by its rear-wheel-drive architecture. Its dynamic driving characteristics will bring a completely new driving experience into this segment. Premium is not a question of size but of finding the right concept.

You are hoping to reach new sales records in 2004. The figures for February show an increase. What does the order situation for the next two months look like?

The number of orders we received is encouraging and it is even slightly above our expectations. The X3 is on the rise, the 5 series is available in all versions, the 5 series Touring and the Mini convertible will be on the market soon. We are very optimistic that 2004 definitely will be a record year for the BMW, Mini and Rolls-Royce brands.

Unit sales of the 6 series coupe are said to be well above your expectations.

The order situation is indeed very good worldwide. Which is proof that this automobile is very appealing emotionally and technically. It is part of a segment that we were not represented in for 15 years.

It is said that the estimated ion volume of the 6 series was too low.

I would not say too low, but we might have been a bit too careful with our planning.

Have the BMW plants reached their full capacity?

Yes, but that has always been one of our attributes. We have always tried not to build any excess capacity. We only expand when it is really necessary. Which is why we decided to build the new plant in Leipzig -- we need new capacities if we want our product and market offensive to succeed. From next year on, this additional capacity will help us to take the next step regarding sales volume.

What do you think of the new Audi A6? Could it put pressure on the BMW 5 series?

The car is attractive, but we will wait and see. A look at the worldwide sales of the A8 shows that BMW and Mercedes-Benz are still in a different league.

Your financial staff say that Audi is only half as profitable as BMW.

You will be able to make exact comparisons once we announce our results for 2003 on March 17. Overall, there are worlds between the two companies' sales and results. It is clear that Munich is the stronger one.

BMW's most recent return on investment was 7.8 percent. When will you reach two-digit figures?

A two-digit figure is not quite realistic. With the return on investment we reached in 2002, which was significantly above 7 percent, we are in the top group. If we manage to hold this level and grow at the same time, then we are quite a strong company. Still, it is our aim to improve here, too. We are interested in profitable growth. We will continue to be one of the most profitable businesses in the industry.

In 2003, the USA was BMW's strongest market for the first time. What are your US sales targets for 2004?

Generally, we have more growth potential in the USA than in Europe because our market share there is still smaller. We believe the prospects for 2004 are good in the USA because the overall market will develop more positively than in 2003. Besides, we still see potential within Europe for 2004. We also see good growth potential for our products in Asia -- not only in China but also in Japan.

Could increased purchasing within the dollar zone help compensate BMW's losses due to the strong euro?

Yes. When the opportunity arises, and it fits the future product program, we will increase purchasing outside the euro zone. Our purchasing team in Spartanburg, for example, does not only work for the US plant but also increases the purchasing activities within the NAFTA region for the whole corporation.

VW just announced an extensive savings program. Will BMW also take cost-saving steps?

So far, BMW has been optimizing costs within certain sectors every single year. Our corporation's cost management is very strict, which is not perceptible to the public. That is why we have never found ourselves in a situation in which a crisis-management program was necessary.

Regarding Rolls-Royce, if your unit sales remain similar to those you managed in December, you may be selling many more than the planned 1,000 units in 2004.

Just on the basis of the figures, yes. However, one should never project one month's figures onto the whole year. We do not intend to raise our goals -- the planned 1,000 units are a good figure. The order situation is very good. We continue to have five to six orders a day.

Tags: Automakers BMW

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