BMW considers raising U.S. capacity, expects pretax profit to rise 'significantly'

BMW CEO Norbert Reithofer says the company is considering raising capacity at the Spartanburg, S.C., plant.

Photo credit: BMW
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MUNICH (Reuters) -- BMW is looking at raising production capacity at its plant in the United States and releasing 12 new models as it chases record car sales and a rise in pretax profit in 2014, the company said today.

BMW's plant in Spartanburg, S.C., which has an annual production capacity of around 350,000, makes SUVs, including the X3, X4, X5 and X6 models.

"The U.S. will stay a market with great potential for us. This is why we are evaluating the possibility of increasing capacity in the U.S.," CEO Norbert Reithofer said at the company's annual results press conference.

Investments made at plants in China will allow BMW to raise production capacity there to 400,000 cars, from 300,000 in 2013.

The owner of the Mini, Rolls-Royce and BMW brands reiterated it aims to achieve a significant rise in sales volume in 2014, after it delivered a record 1.96 million cars in 2013.

"We expect group profit before tax to rise significantly in the current year, despite ongoing volatile business conditions," Reithofer said.

Last week, BMW reported its automotive division's fourth-quarter earnings before interest and tax dropped 14 percent to 1.77 billion euros ($2.46 billion), beating analysts’ expectations of 1.68 billion euros.

The forecasts are based on the assumption that political and economic conditions remain stable in 2014, and on a steady recovery in European markets, BMW said.

BMW expects significant growth in markets outside of Europe including high single-digit growth in North America and low double-digit growth in China.

Analysts welcomed the positive outlook.

"We see BMW's confidence as a major positive trigger for the stock," analysts at ISI Global said in a note today.

BMW said it expected sales in the second half of 2014 to be higher than in the first six months as a result of a large number of model launches, including of the compact 2-series coupe and the 2-series Active Tourer.

Competition among Germany luxury-car makers is heating up as Audi, which ranks second in the segment on an annual basis, outsold BMW’s namesake brand in the first two months of 2014. Mercedes-Benz, which holds third place, has boosted deliveries faster than the two larger rivals in recent months.

BMW has ramped up spending in recent years to fend off Audi and Mercedes, which both plan to take the luxury-sales crown by the end of the decade. The three German manufacturers are also facing a challenge from expansion by smaller producers of upscale vehicles, including Jaguar Land Rover and Maserati.

Audi, which has never held the top luxury-car sales post for an entire year, will introduce 17 new or revamped vehicles in 2014, including a remake of the iconic TT sports car. Mercedes is rolling out 30 autos by the end of the decade, including a dozen all-new cars.

Bloomberg contributed to this report.

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