BMW Group is the world's largest premium carmaker and saw sales volumes rise 7.9% in 2014 to a record 2.1m units. This was driven by a recovery in European demand and continued strong sales growth in Asia. BMW's recent investment in fuel efficiency and new models suggest that it is well placed to capitalise on the underlying growth drivers in its market.
A premium product can be defined as one that “promises a stronger satisfaction of needs by special characteristics." This translates into consumer desirability and the realisation of a higher sales price in the market place.
BMW Group's three brands: BMW, MINI & Rolls-Royce
Source: BMW Group investor presentation
BMW Group is the largest premium carmaker by volume with its main brand, BMW, experiencing a 9.5% increase in sales to 1.8m in 2014. The small car brand, MINI, saw sales fall by 0.9% in 2014 to 302,183 as a planned model changeover hit demand.
Europe is the key market for BMW Group and saw a 6.4% increase in vehicles sold in 2014 to 914,587. The second largest market, Asia, saw a 13.8% increase in vehicle sales in 2014 to 658,384, and in third place the Americas saw a 4% sales gain to 482,257 units.
BMW's sales by market in 2014: firing on all cylinders
Source: BMW Group investor presentation
BMW Group is clearly currently firing on all cylinders with European demand recovering and Asian demand continuing to grow at a rapid clip. BMW's total vehicle sales in 2014 increased by 7.9% to a record 2.1m units, which is the fifth year of growth and 90% higher than the 1.1m sold in 2003.
Looking at the performance over the financial crisis and sales fell by 14.3% from 1.5m in 2007 to 1.29m in 2009. Cars are consumer discretionary items with purchases deferred in tough economic times and as such car markers are viewed as cyclical stocks.
BMW has seen strong sales growth since 2003
Source: BMW Group investor presentation
The outlook for continued sales growth at BMW is positive with global demand for premium cars expected to increase by 37% from 8.26m in 2013 to 11.35m in 2020. This represents compound annual growth of 4.6% and reflects growing demand from emerging markets like China.
As countries get wealthier premium cars become a greater proportion of total sales with consumers shifting to higher-end brands. …
