BMW Net Profit Declines by 90 Percent
With global demand for cars, especially sports and luxury models, continuously plummeting to record-low, German carmaker BMW reported 90 percent decline of net income. In 2007, the company reported €3.1 billion worth of net profit, but this earning only plummeted to €330 million the following year.
Automaker giant BMW announced its net profit report in 2008 which fell by 90 percent, a direct result from the ongoing economic crisis which affects the global demand for luxury and sports cars.
The German carmaker said the dramatic decline of profit is alarming, adding that in 2008 the company earnings were only €330 million, a far outcry from 2007’s €3.1 billion worth of net income.
The total car production last year has also dropped to 6.6 percent or nearly 1.5 million vehicles, BMW said.
In a statement, BMW chief executive Norbert Reithofer said the company has at least prepared contingency plans during this “extremely difficult economic times”, adding that cost cutting measures and effective financial management have allowed the firm’s finances remain afloat despite slumping global demand for cars.
Earlier report said the carmaker has implemented cost-cutting measure that will save up to €4 billion after the next three years.
Meanwhile, the company did not only blame the weakening demand for cars as the culprit of its all record-low sales since its finances is also hunted by €2.4 billion worth of bad debts and other liabilities.
US carmakers have also been reeling from the impact of recession that General Motors and Chrysller were given federal financial aid worth billions of dollars to keep its finances afloat.
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