BERLIN (Bloomberg) -- BMW reported improved profits in the third quarter as demand for the X3 sport-utility vehicle offset lower sales of the 1 series.
Earnings before interest and taxes rose 44 percent to 1.72 billion euros ($2.35 billion) from 1.19 billion euros a year earlier, the company said on Thursday.
Revenue climbed 3.8 percent to 16.5 billion euros.
Growth has slowed for high-end carmakers from the record pace in the first half as Europe's debt crisis unsettles consumers.
BMW's profit beat the 1.58 billion-euro average estimate of 18 analysts surveyed by Bloomberg.
Daimler AG, maker of Mercedes-Benz, reported its first earnings drop since the third quarter of 2009, burdened by expenses for new models. BMW in the quarter lost its profitability lead in the luxury-car segment to Audi.
"Challenges to keep flexibility, to keep the efficiency up there are pretty huge for the industry," Arndt Ellinghorst, a London-based analyst with Credit Suisse, said in a Bloomberg Television interview. Still, manufacturers like BMW with a strong brand and a global presence are better positioned than "euro-centric mass producers."
Operating profit at BMW's automotive unit declined to 11.9 percent of sales from a record 14.4 percent in the second quarter as sales of the 1 series compact and 3 series sedan fell ahead of the introduction of next-generation versions, and the company spends 500 million euros in the second half to introduce the overhauled models.
The declines and costs were partially offset by higher deliveries of the X3 and 5 series sedan.
"It seems that the phase-out of the 1 series and 3 series is going better than planned," said Georg Stuerzer, a Munich-based analyst with Unicredit. "With that kind of a margin during the changeover of the best- selling models, you can't complain."
BMW introduced an overhauled 1 series in September and will follow with the revamped 3 series in February.
Deliveries of the 1 series fell 28 percent to 34,600 vehicles in the quarter, while 3 series sales slipped 1.4 percent to 95,200 cars as customers waited for the new versions. Sales of the X3 tripled to 30,200, while 5 series deliveries rose 31 percent to 79,900.
BMW stuck to its forecast that 2011 sales and profit will be "significantly higher" than last year. Third-quarter net income rose 24 percent to 1.08 billion euros.
"The main reasons for this excellent performance have been strong demand worldwide for our vehicles and considerable efficiency improvements," CEO Norbert Reithofer said in a statement.
The group's third-quarter operating margin was 10.4 percent after a loss in the motorcycle division.
Volkswagen AG's Audi, which aims to take the luxury-car lead by 2015, surpassed BMW with an Ebit margin of 13.1 percent.
BMW's growth in car sales over the last quarter slowed to 9 percent from 18.5 percent in the second as the 1-and 3- series get renewed and the aging X5 sport-utility vehicle faces the revamped Mercedes-Benz M class. Deliveries of all three models declined in the period, according to BMW data.