posted April 25, 2008 01:58 PM
Falling prices and rising bad debt in the U.S. caused BMW to become the first major European industrial firm to fall victim to the credit crunch as the German automaker announced Thursday it was taking a $369-million charge, the Financial Times reported.BMW, which announces first-quarter results on Tuesday, reaffirmed its full-year profit target of a slight increase over last year’s pre-tax level, the paper reported. But the automaker blamed the credit crunch for a sharp deterioration in used car prices, particularly in the U.S.
BMW noted increased volatility in the U.S. leasing market. It said prices of used or leased cars fell in January, then rose in February before falling sharply in March.
"The growth of the company in the past couple of years has been at the expense of a significant expansion of financial services,” Arndt Ellinghorst, head of automotive research with Credit Suisse in London told the Financial Times. “A significant portion of these great sales were bought by cheap leasing and financing deals, and now it’s paying back.”
BMW's charge comes amid worries among many carmakers about the impact of the credit crunch. Daimler CEO Dieter Zetsche has warned that industry car sales in the U.S. would fall this year but be offset by growth in emerging markets.
Still, BMW's move could lead to increased nervousness about the impact of the financial crisis on the real economy in Europe, even as most companies report robust first-quarter results, the paper concluded.
Lindaland
UBBFriend: Email This Page to Someone! 
posted April 25, 2008 01:58 PM