Luxury carmaker BMW has raised the outlook for its core auto business's profitability this year amid an ongoing boom in demand for luxury cars in China.
BMW said today it now sees its auto business reaching an operating margin of more than 7 per cent this year, rather than the 5 per cent-plus that it aimed for in August.
"We want to increase group earnings significantly in the current year and thus take an important step towards achieving our targets for 2012," BMW chief executive Norbert Reithofer said in a statement.
Much like rival luxury brand Mercedes, which increased its earnings guidance three times this year already, BMW has been surprised by the abrupt surge in demand.
Third-quarter earnings before interest and taxes (EBIT) at its automobiles division rose to €1.15 billion, giving it an EBIT margin of 8.1 per cent.
By comparison, Daimler's Mercedes posted a quarterly EBIT margin of 9.5 per cent, and Audi earned an operating return of almost 11.2 per cent - a level so high analysts doubt it is sustainable.
In October, group head of sales Ian Robertson forecast volumes will grow at least 10 per cent in the fourth quarter, implying 2010 sales of just over 1.44 million vehicles - the second highest figure on record after 1.5 million in the boom year of 2007.
Reuters