BMW Accused of Profiteering on UK Sales While Claiming High Pound Causes Losses

BMW is under scrutiny for allegedly profiting from sales in the UK while shifting the blame for its losses at Rover to the strong pound. Analysts have found that the favorable exchange rate has resulted in bigger profits for the company without any corresponding decrease in prices for UK customers. The profit margins on BMW cars sold in the UK have increased substantially, with some analysts estimating that BMW could gain an extra 800 million marks, or £270 million, due to the exchange rate. Meanwhile, Rover struggles with uncertainty, and the company's managing director and unions acknowledge a productivity gap that needs to be addressed.

Key Takeaways:

• The exchange rate has increased BMW's revenue by 18.5% for each car sold in the UK, from 70,239 marks to 83,027 marks per car.
• BMW sold 63,700 cars in the UK last year, with 40,000 of them being the 3 Series, and estimates a small decrease in sales this year.
• Prof Garel Rhys, motor industry analyst at Cardiff Business School, said BMW is keeping down its UK import figures to maintain a firm price in the showroom.
• Prof Rhys also explained that pushing up the price at the point of excessive demand is the company's strategy, rather than taking it down.
• Analysts Standard and Poor's and Charterhouse Tilney agree that BMW's profit margins are high and have not been cut despite the strong pound.
• The BMW board meets today in Munich to scrutinize all aspects of its Rover operation, amidst Rover's struggles with sales and financial targets.

Statistics:

• The exchange rate has increased BMW's revenue by 18.5% for each car sold in the UK.
• 63,700 cars were sold in the UK last year, with 40,000 of them being the BMW 3 Series.
• The profit margins on each BMW vehicle sold are exceptionally high, with no evidence of any importer giving way on prices due to the strength of sterling.
• The BMW board meets today in Munich to scrutinize all aspects of its Rover operation.
• £500 million is the estimated loss for Rover this year.
• £270 million is the estimated extra revenue BMW could gain due to the exchange rate.

Sources:

• "BMW has been accused of profiteering on sales to Britain while blaming the high pound for its losses at Rover..." - The Times
• "Analysts said the profit margins on BMW cars were not made public." - The Times
• "Prof Garel Rhys, motor industry analyst at Cardiff Business School, said BMW was deliberately keeping down its UK import figures to maintain a firm price in the showroom." - The Times
• "The profit margins have increased on BMW cars sold in the UK substantially and by a significant amount." - Colin Couchman, motor industry expert at analysts Standard and Poor
• "The prices they have achieved from private buyers are exceptionally high. There is no evidence around the country of any importer giving way on prices as a result of the strength of sterling." - Michael Blogg of analysts Charterhouse Tilney
• "The exchange rate is lower than it was when we came into Government." - Chancellor Gordon Brown
• "We shouldn't kid ourselves we don't have this problem." - Chancellor Gordon Brown