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July 27, 2010, 2:34 p.m. EDT

Luxury-Car Sales Recover

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By Christoph Rauwald

FRANKFURT—Luxury-car makers boosted their outlooks for 2010 as demand recovered faster than expected after a woeful 2009, fueled by a growing number of affluent Chinese customers and a rebound in the U.S.

Audi /zigman2/quotes/207972355/delayed DE:NSU +0.63% AG will report a "very significant" annual rise in second-quarter earnings, fueled by stronger car sales, and plans to offer more concrete full-year sales guidance on Friday, the German luxury car maker's chief executive, Rupert Stadler , said late Monday.

"We will exceed the 1 million (car sales) significantly this year," Mr. Stadler told reporters at the presentation of the new A7 coupe in Munich, reiterating previous statements. He declined to be more specific, but noted that "we might have something more to say on this on Friday."

Audi's German rival Mercedes-Benz on Tuesday said it expects to contribute €4 billion ($5.2 billion) in earnings before interest and tax, or Ebit, to parent Daimler /zigman2/quotes/205332368/delayed DE:DAI +1.05% AG's full-year profit, which is expected to total at €6 billion this year.

The company had previously expected Ebit at the core Mercedes-Benz Cars unit to come in at the upper end of a €2.5 billion to €3 billion range in 2010 and group Ebit to exceed €4 billion. The Mercedes-Benz Cars unit comprises the Mercedes-Benz, Smart and Maybach nameplates.

"We have a very dynamic development of unit sales and revenue in all divisions," Daimler Chief Executive Dieter Zetsche said in a statement, adding that the Stuttgart-based firm expects "significant revenue growth" for the full year.

Mr. Zetsche confirmed previous statements saying the unit is expected to achieve a return on sales of 10% in the second half of 2012 and maintain this level in 2013.

In the second quarter, return on sales at the Mercedes-Benz Cars division was 9.8%, driven by strong demand for large models with healthy profit margins such as the updated Mercedes-Benz E-Class and the flagship S-Class sedan, particularly in China.

Daimler said the Mercedes-Benz brand reported its strongest second quarter ever, with car sales rising 24% on the year to 314,400 vehicles.

For the second half of the year, Mercedes-Benz expects "the positive trend of the first two quarters to continue, but no longer with the same dynamism." Still, car sales at the Mercedes-Benz brand are expected to rise by a double-digit percentage rate in 2010.

Audi's parent company Volkswagen /zigman2/quotes/206736865/delayed DE:VOW +0.62% AG is scheduled to release earnings on July 29, followed by more details on Audi's performance on July 30. In the first half of the year, Audi's car sales rose 19% from a year earlier to 554,950 vehicles.

Audi, the premium unit and key earnings contributor to Volkswagen, Europe's largest auto maker by sales, is targeting a new sales record this year, driven by several updated or new models such as the small A1 and the A7 luxury coupe.

The A7 will go on sale in late September with prices starting at €51,700, and Germany, U.K., U.S. and China are expected to be the car's main sales regions.

Mr. Stadler said Audi plans to sell about 200,000 A7 cars over the model's entire life cycle of about seven years, adding that a hybrid version might be added at a later stage.

Audi's sales volume reached a record high in 2008, when the Ingolstadt-based firm sold just over 1 million cars, but sales declined last year when demand for premium cars collapsed amid the economic downturn.

The luxury car sector, however, recovered faster than expected in the first six months of the year and automakers are upbeat that growth will continue in the second half of 2010.

BMW /zigman2/quotes/209548467/delayed DE:BMW +0.71% AG, the world's largest luxury car maker by sales ahead of Mercedes-Benz and Audi, said earlier this month that pretax profit in 2010 is set to rise more sharply than previously anticipated because vehicle sales are expected to be better than hoped.

BMW now expects vehicle sales this year to rise by about 10% to more than 1.4 million cars, after previously forecasting a rise in the single-digit percentage range to more than 1.3 million cars. The company sold 1.29 million cars in 2009, down 10.4% on the year earlier.

BMW is scheduled to release second-quarter earnings on August 3.

Write to Christoph Rauwald at christoph.rauwald@dowjones.com

/zigman2/quotes/207972355/delayed
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1,600.00
+10.00 +0.63%
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€670,474
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/zigman2/quotes/205332368/delayed
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43.84
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Volume: 22,447
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€560,333
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/zigman2/quotes/206736865/delayed
DE : Germany: Frankfurt
145.10
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Volume: 652.00
Sept. 22, 2020 5:06p
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€354,929
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/zigman2/quotes/209548467/delayed
DE : Germany: Frankfurt
61.16
+0.43 +0.71%
Volume: 2,617
Sept. 22, 2020 4:23p
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Rev. per Employee
€723,779
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