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Sales are down, but BMW is still OK

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Bill Radke: What else can go wrong for the car industry? Oil shock, global recession,
plant closings — not just American carmakers, either. Germany’s Daimler, which makes Mercedes, lost almost $2 billion last quarter. Next week, we get an earnings report from Daimler’s smaller German rival, BMW. Marketplace’s Stephen Beard reports from Munich.

Stephen Beard: BMW’s HQ in Munich is unmistakeable: Four towers shaped like engine cylinders thrusting into the sky. The company itself clearly isn’t firing on all four cylinders at the moment. Global sales fell 20 percent in the first quarter.

But, says spokesman Michael Rebstock, the global market for premium cars fell by 25 percent.

Michael Rebstock: Compared to this general slump, BMW has done quite fine. Compared to our competitors, we were able to increase our market shares.

He says BMW’s even held up well in the dire American market by addressing U.S. concerns about fuel efficiency and climate change:

BNW American Ad: If this is the carbon footprint of the average U.S. driver, this would be your carbon footprint if you drove BMW Advanced Diesel.

Analysts say that BMW grasped the need for fuel efficiency far quicker than the big three American carmakers. And, claims Michael Rebstock, the German company was also quick off the mark last fall, cutting production as the downturn intensified.

Rebstock: We have not many unsold car. We managed to reduce production in a very early stage of the crisis.

One-third of BMW’s 75,000 work force are now working shorter hours for less pay. Flexible, fast on its feet, and with powerful brands, BMW seems well able to weather the crisis.

But analyst Jurgen Pieper in Frankfurt says the company is losing money. And it’s half the size of industry giants like Volkswagen. It could be taken over.

Jurgen Pieper: One has to watch it very carefully over the next couple of quarters if BMW can come back to nice levels of profitability. If not, then they really look vulnerable, I think.

Other analysts claim that BMW is not too small. After all, they say, size hasn’t saved GM, Chrysler and Ford from disaster.

In Munich, this is Stephen Beard for Marketplace.

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