BMW Sees Overhauled 5 Series, New X2 Fueling Sales Increase

(Bloomberg) -- BMW AG is betting an overhauled 5 Series sedan and new X2 crossover will boost sales this year as the world’s second-biggest luxury carmaker works on its pledge to retake the global lead from Mercedes-Benz.

Those models, plus an updated X3 utility vehicle, should carry BMW to gains in all markets, including the U.S. and China, Chief Financial Officer Nicolas Peter told reporters Monday at the North American International Auto Show in Detroit.

Chief Executive Officer Harald Krueger told shareholders last May that BMW is going into “attack mode,” with a two-year record rollout of new and revamped models to overtake to its arch rival. That contrasted with a prediction for a “slight” increase in sales for 2017, when deliveries at the namesake brand ended up rising 4.2 percent to almost 2.1 million vehicles, and lagged behind a 9.9 percent jump for Daimler AG’s Mercedes.

BMW is starting deliveries of the all-new X2 and full-size X7 sport utility vehicle this year as it seeks a spark after two years of trailing Mercedes. The slip into second place and a downgrade to expected 2017 auto revenue has put Krueger under pressure as he balances sales success with profitability while making the costly jump into the industry’s electric powered robo-vehicle era.

Changing Tack

Krueger, who took charge in 2015, changed tack last year following a low-key approach in the early part of his tenure. In addition to plans to offer at least 12 electric cars by 2025, the carmaker is also expanding its suite of high-end vehicles. Munich-based BMW, like other industry players, is fighting to boost profitability to cover climbing investments in the shift to new forms of driving and standing its ground against newcomers such as Tesla Inc. and Alphabet Inc.’s Waymo.

BMW’s development spending will rise to as much as 7 percent of sales this year, from 6 percent in 2017 and a typical level of about 5 percent, Peter said. Daimler has flagged that its 2017 expenditure would again “significantly” exceed the previous year’s “already very high” level.

German automakers are battling with the disruptive shift sweeping the auto industry alongside dealing with the ongoing fallout from Volkswagen AG’s cheating on diesel emissions. Since the scandal erupted more than two years ago, diesel technology, which makes up about half of car sales in Europe, has come under scrutiny about excessive pollution in real-life conditions, raising the threat of driving bans and depressing demand for the lucrative models.

To contact the reporter on this story: Elisabeth Behrmann in Detroit at ebehrmann1@bloomberg.net.

To contact the editors responsible for this story: Anthony Palazzo at apalazzo@bloomberg.net, Tom Lavell, Craig Trudell

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