German Manufacturers Challenges Analyst Predictions: Earns Huge Profits
German automakers defy the prediction from analysts across the auto industry, as they beat analyst expectations, and lead the charts of the top sellers for this fiscal year. BMW came in third among the top three manufacturers with a 19 percent increase in first quarter profit, which is in fact a beat to analyst’s predictions. The sales of the BMW 1-Series jumped 20 percent, which helped the company to set a record total of 425,528 vehicles in the first quarter.
Volkswagen and Daimler also said earnings rose, countering expectations for a decline. Both the automakers blew past analysts’ expectations with VW increasing profit 10 percent and Daimler generating 4.9 percent more that previous year’s first quarter. There is an increasing demand for BMW, Mercedes-Benz and Audi models in the United States and China and as a result, carmakers and their suppliers performed well in Europe this year. The desire for German nameplates explains little sign of abating with new models, which includes the VW Golf, the Audi A3 and the Mercedes A class.
“For BMW and Volkswagen I see a high probability that they will raise forecasts after the second quarter. In fact, I pretty firmly expect them to do so,” said Juergen Pieper, a Frankfurt-based analyst at Bankhaus Metzler. Besides, Porsche also gained first-quarter profit with Ebit gaining 18 percent. The sales of its revamped 911 models and Panamera four-door coupe helped the automaker to attain a 32 percent increase in revenue.
As stated earlier, the profit earned by German automakers is mainly due to its increasing popularity of German models in U.S. and China. Analysts are keen on watching the ups and downs of these automakers and many expect BMW and VW to move up their second quarter forecasts. But, some analysts sees things differently as they say China’s market as a cool one and gives BMW a neutral rating while rating VW and Daimler as good buys.