German motor group BMW is poised to breach the €200 million sales threshold in the Irish market this year as annual sales of the luxury marque approach 6,000 vehicles for the first time.
But BMW's rapid expansion here has come at the expense of profit margins, with new figures showing a sharp drop in operating and pretax profits at the unit which imports the marque and its sister brand Mini into the Irish market.
With the upward movement in interest rates doing nothing to deter motorists from their appetite for new cars and expensive brands such as BMW, the group is benefiting from increased marketing activities in a boom fuelled by payouts from the SSIA scheme.
Newly filed accounts for BMW Automotive (Ireland) Ltd - the BMW subsidiary which bought the BMW import rights from veteran dealer Frank Keane in 2003 - show that turnover rose by almost 16 per cent last year to €195.18 million.
Operating profit fell to €7.28 million from €9.94 million and pretax profits fell to €9.01 million from €9.91 million.
Such figures reflect trading in a year in which sales of BMW cars increased to 5,623 from 4,820 in 2004, bringing the marque's market share to 3.27 per cent from 3.13 per cent. Sales of the Mini marque rose to 1,001 from 737, but its market share fell to 0.48 per cent from 0.58 per cent.
With BMW sales in the nine months to September already at 5,929, managing director Seán Green said the €200 million figure was within reach. "I would really expect to break the €200 million. If we get to €205-€210 million, fantastic," he said.
Mr Green attributed the fall in profits to higher marketing costs and higher overheads generally. He expected a "similar level of percentage profit" in the current year.
While some BMW dealers are known to have recorded losses last year because they were carrying too much stock, Mr Green also attributed part of the drop in profits last year to additional support the group gave to its dealer network.
"Business performance is sustained by strong economic conditions, in particular consumer spending and confidence. The directors anticipate performance to continue to reflect the current economic climate in the forthcoming period," said a note with the accounts. "Both the level of business and the year-end financial position were satisfactory and the directors expect this level of activity will be maintained for the foreseeable future."
The Irish business accounts for a small part of BMW's international empire, which also includes the Rolls Royce franchise and a motorcycle brand.
The BMW group had revenues of €46.66 billion in 2005, pretax profits of €3.29 billion and a net profit of €2.24 billion. It produced a total of 1.12 million BMW vehicles and 200,119 Minis.
