Daimler the biggest Q1 Euro loser

MERCEDES-BENZ parent company Daimler AG has posted a net operating loss of €1.286 billion ($A2.287b) for the first three months of 2009, easily making it Europe’s worst-performing volume car-maker in the first quarter of this year.

Daimler’s Q1 2009 loss, announced last week, is almost as big as its Q4 2008 net profit of €1.332 billion ($A2.353b) and presents a stark contrast to its most direct rival in BMW AG, which yesterday (May 6) posted a relatively meagre €55 million ($A97.2m) operating loss before interest and taxes.

However, both premium German brands were out-performed by Volkswagen Group, the largest European car-maker that overtook Ford last year, and its luxury division, Audi.

As we reported last week, new mainstream models and European government “scrappage” incentives for new-car buyers helped Volkswagen to record a €243 million ($A448m) profit in the first quarter compared with a €929 million ($A1.7b) in the same period last year – which nonetheless represented a 74 per cent profit slump after sales dropped 16 per cent to 1.35 million units.

Volkswagen would have recorded a loss if it had not sold its Brazilian commercial vehicle business to German truck-maker MAN for €600 million ($A1.1b), although Audi’s Q1 profit fell to a still-healthy €363 million ($A640.9m) – 29.4 per cent down on its Q1 2008 profit of €514 million ($A907.5m).

Also within the Volkswagen Group’s Q1 financials released last week, Skoda Auto posted an operating profit of €28 million ($A49.3m). The Czech Republic’s largest car-maker delivered 143,079 cars to customers in the first three months of 2009 – down 17.5 per cent on 2008 figures when the worldwide automotive market was down 20.7 per cent.

Left: Mercedes-Benz E-class. Below: BMW AG chairman Norbert Reithofer.

BMW’s Q1 loss followed sliding sales of models including the aged X3 medium SUV, and the company said it was unable to provide a reliable earnings forecast for the full 2009 calendar year, which it described as a year of “transition”.

BMW AG chairman Norbert Reithofer said there were no signs the market would recover until 2010, but revealed new BMW sales targets for its vehicle business for 2012, by which time he said roughly half of the Bavarian maker’s volume should have been replaced with the new generations of its 1, 3 and 5 Series models.

BMW now says it will sell no fewer than 1.6 million vehicles in 2012 but admits it will fall short of its previous target of 1.8 million units by at least 100,000 vehicles. It said that would allow it to reach its profitability targets for its vehicle division in 2012, which include a 26 per cent return on capital and earnings before interest and tax (EBIT) margin of between eight and 10 per cent.

“We have continued our forward-looking finance and cost management strategies with great determination during the opening quarter of the year,” said Mr Reithofer in Munich yesterday. “In view of the difficult conditions still prevailing on the financial markets, we remain focused in our efforts to improve our liquidity position.”

BMW Group revenues for the quarter fell by 13.4 per cent, from €13.3 billion ($A23.5b) in 2008 to €11.5 billion ($20.3b) this year following a 21.2 per cent Q1 sales slump to 277,264 BMW, Mini and Rolls-Royce vehicles (down from 351,787 in 2008). Sales of BMW cars were down 20.5 per cent, while Mini was down 24.9 per cent and Rolls was down just 4.9 per cent.

Nonetheless, the company says it increased its market share of the worldwide premium vehicle segment to 20.7 per cent, while BMW’s share also increased in its largest market, the US.

“We intend to maintain or further increase our market shares in the premium segment in the current year,” said Mr Reithofer.

BMW said additional variants of its new 7 Series – including a hybrid version – as well as its new Z4 (on sale here this month), 5 Series Gran Turismo and X1 (both on sale here in early 2010) and M versions of the X5 and X6 – will lift sales during the remainder of 2009.

Meantime, Mercedes-Benz Cars blamed the generational change of its E-class sedan for a significant decline in vehicles sales from 318,3000 in Q1 2008 to 231,200 in the first three months of this year. As a result, the car-maker’s first-quarter revenue decreased by 27 per cent to €9.1 billion ($A16.0b).

The Stuttgart-based maker said it expected its total vehicles to “decrease significantly” in 2009 from the 2.1 million vehicles it sold in 2008, and that the Daimler Group’s total revenue is likely to fall sharply from the €95.9 billion ($A169.3b) it earned last year.

This is despite the compact GLK SUV going on sale late last year, the new E-class launching in Europe in March and coupe, wagon and convertibles derivatives to follow. Benz said all-new versions of the S-class and GL were under development.

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Global car-makers post Q1 losses