BMW Shifts 'Tens of Thousands' of New Cars for Sale from Europe to US and Asia

As if any further evidence were needed that the European economy is stalled, BMW announced that it was transshipping tens of thousands of cars originally intended for the European market to the US and Asia.

European auto sales are experiencing their largest drop in sales since 1993, 19 years ago. Or to put it in global context, as Europe was still suffering from the aftermath of the Soviet Union's collapse and the resultant disruption of trade patterns that resulted.

The US economy is hardly booming and China is still trying to deal with the effects of its commercial slowdown and burst real estate bubble, but the market for 'Beemers' remains strong, as the demographic to which they are marketed remains less impacted by the recession than the bulk of the population in either country.

Even in Europe, sales may be tumbling less because of declining incomes than because of caution in the face of the euro crisis and general uncertainty about economic prospects in the near term.

What this does imply is that margins on luxury autos like BMWs are sufficient to offset the added shipping and environmental or engineering adjustments required for differing markets. It also reinforces the belief that the global supply chain remains robust, highly adaptable and relatively unconstrained by local or regional issues. This is good news for German autoworkers, but a signal to other companies who still labor under the illusion that time and distance are a barrier to trade. JL

Dorothee Tschampa reports in Bloomberg:

Bayerische Motoren Werke AG (BMW) has shifted “tens of thousands” of cars that were originally targeted for Europe to the U.S. and Asia this year as sales weaken in the crisis-hit region. “Challenges in Europe are getting greater,” Ian Robertson, sales chief for the world’s largest luxury-car brand, said to reporters today at a company event in Munich. The region faces “a lot of bumps on the road” before it stabilizes and an auto-market recovery could take years, he said.

Europe’s car industry is poised to suffer its biggest annual sales drop in 19 years in 2012. Munich-based BMW has avoided the brunt of the European sovereign-debt crisis thanks to demand in the U.S. and China for models like the new 3-Series sedan. The brand sold 14 percent more cars and sport-utility vehicles in September globally, helping boost nine-month deliveries 8.6 percent to 1.11 million vehicles.

Robertson said he expects “good” growth in the U.S. in October and November, and China is still attractive, even if growth has slowed since the beginning of the year.

“The slowdown in China is part of what’s happening in Europe,” as the effects of the debt crisis ripple beyond the continent, he said.

The growth elsewhere doesn’t help BMW’s partners in Europe, and the company may need to help dealers through the crisis, especially in Spain where it faces “some very difficult decisions” on restructuring the dealership network, Robertson said.