Unless residuals change, this sounds like adverstising to me............
BMW hit by sagging prices for used cars
Reuters
April 24, 2008 at 1:49 PM EDT
HAMBURG — BMW, the world's largest premium carmaker, will book a €236-million ($372-million U.S.) charge for the first quarter as the turbulence in credit markets forces it to mark down the value of used cars.
“The financial crisis has become more severe of late. This has resulted in a drop in pre-owned car selling prices, particularly in North America, and consequently in a reduction of revenues that can be generated on vehicles at the end of lease contracts,” it said in a statement on Thursday.
“This downward trend accelerated during the month of March.”
It confirmed its full-year target for a higher pre-tax profit in 2008 when excluding an exceptional gain last year on a Rolls-Royce exchangeable bond.
The statement comes just over a week after BMW hosted an investor event in its Spartanburg plant in South Carolina, where it gave no additional details into the problem of rising default rates and sinking residual values for used cars.
“BMW provided very little incremental data on Financial Services and the potential risks from €20-billion of leased assets, €30-billion of dealer and customer financing receivables and €23-billion in debt that needs to be refinanced in 2008,” Credit Suisse wrote in a note published last Thursday.
It added that the company was “not in a position” to report a reversal of the trend of falling U.S. residual values and increasing credit defaults that amounted to five basis points in 2007 and an additional five basis points since the start of this year.
“When asked explicitly whether BMW could rule out a loss at financial services this year, the treasurer avoided a clear answer,” Sal Oppenheim wrote that same day.
Volkswagen earlier reaffirmed it did not expect to be hurt by credit market turmoil given high cash surpluses at its automotive division as well as a broad equity base.
“We don't expect these (market uncertainties) to directly affect our business activities, not even in our Financial Services division,” VW Chief Financial Officer Hans Dieter Poetsch said at the company's annual meeting.
A spokesman for Porsche said on Thursday that the company had no additional need for provisions.
Daimler declined to comment ahead of its first-quarter results due on Tuesday.