FRANKFURT, Germany (AP) -- Carmaker BMW said Tuesday net profit for the third quarter dropped 63 percent as the global economic turmoil made consumers more reluctant to shell out for its sports and luxury cars and credit costs made it difficult for consumers and the company to borrow.
Overall car production fell 10 percent to 335,000 cars.
The Munich-based company said net profit for the July-September period fell to €298 million ($375.5 million) from €803 million a year ago.
"The knock-on effects of the international financial crisis and a downturn in the global economy had a significant negative impact on the performance of the automobile industry," BMW said in a statement.
"Ongoing consumer reticence on the main sales markets, the weak state of the preowned car markets together with difficult refinancing conditions also took their toll on the BMW group, resulting in a perceptible drop in revenues and earnings."
Sales for the quarter fell 9 percent to €12.6 billion ($16 billion) from 14 billion euros in the same quarter a year ago.
The company said it could not give a concrete outlook.
"Due to the worsening of the financial crisis, it is currently impossible to make stable forecasts for the rest of the year and beyond," BMW said in a statement.
UniCredit analyst Sven Kreitmair said in a research note to investors that the company also indicated that it could rule out "that the risk provisions for bad debts and lease financing will have to be increased again."
Investors, however were not daunted. BMW shares were up 8 percent to €22.20 ($27.97) in Frankfurt trading.
The company said overall car production fell 10 percent to 335,000 cars for the quarter from 372,000 in the year-ago quarter, and deliveries of its flagship BMW branded cars saw a 5.3 percent decline in deliveries, to 290,661 cars from 306,964 a year earlier.
The motorcycles division, meanwhile, saw a 15 percent increase in production to 23,284 motorcycles, while ultra-luxury brand Rolls Royce also increased deliveries, by 17 percent to 332 cars delivered from 285 in the year-ago period.
The compact Mini brand reported a 1.4 percent gain in deliveries for the quarter to 58,105 from 57,315 a year ago.
The company said its results were hit by the higher provisions for bad debt risk related to preowned car markets.
BMW said it raised its provision for residual value risks and credit risks especially for used car loans during the quarter by €342 million ($431 million), bringing that total expense recognized in the first nine months to over €1 billion ($1.26 billion).
The company said its results were impacted by a further €258 million ($325 million) in charges during the nine months related to cutting its work force.
In terms of regions, BMW said European sales developed unevenly. It said it saw "positive impetus" in some countries including Germany, France, Belgium and Luxembourg, but nine month European sales fell 5 percent overall.
In North America, the company sold 6 percent less cars than in the year ago quarter, "dominated by the ongoing financial crisis," and an increase in fuel prices, BMW said.
Meanwhile, the company saw "sharp growth" in central and Eastern Europe as well as in Latin America and Asia.
Total Asian sales were up 9.4 percent in the first nine months, with China, Hong Kong and Taiwan sales up 26 percent compared with the January-September period a year ago. Meanwhile, sales in Japan fell by 16 percent for the period
Overall car production fell 10 percent to 335,000 cars.
The Munich-based company said net profit for the July-September period fell to €298 million ($375.5 million) from €803 million a year ago.
"The knock-on effects of the international financial crisis and a downturn in the global economy had a significant negative impact on the performance of the automobile industry," BMW said in a statement.
"Ongoing consumer reticence on the main sales markets, the weak state of the preowned car markets together with difficult refinancing conditions also took their toll on the BMW group, resulting in a perceptible drop in revenues and earnings."
Sales for the quarter fell 9 percent to €12.6 billion ($16 billion) from 14 billion euros in the same quarter a year ago.
The company said it could not give a concrete outlook.
"Due to the worsening of the financial crisis, it is currently impossible to make stable forecasts for the rest of the year and beyond," BMW said in a statement.
UniCredit analyst Sven Kreitmair said in a research note to investors that the company also indicated that it could rule out "that the risk provisions for bad debts and lease financing will have to be increased again."
Investors, however were not daunted. BMW shares were up 8 percent to €22.20 ($27.97) in Frankfurt trading.
The company said overall car production fell 10 percent to 335,000 cars for the quarter from 372,000 in the year-ago quarter, and deliveries of its flagship BMW branded cars saw a 5.3 percent decline in deliveries, to 290,661 cars from 306,964 a year earlier.
The motorcycles division, meanwhile, saw a 15 percent increase in production to 23,284 motorcycles, while ultra-luxury brand Rolls Royce also increased deliveries, by 17 percent to 332 cars delivered from 285 in the year-ago period.
The compact Mini brand reported a 1.4 percent gain in deliveries for the quarter to 58,105 from 57,315 a year ago.
The company said its results were hit by the higher provisions for bad debt risk related to preowned car markets.
BMW said it raised its provision for residual value risks and credit risks especially for used car loans during the quarter by €342 million ($431 million), bringing that total expense recognized in the first nine months to over €1 billion ($1.26 billion).
The company said its results were impacted by a further €258 million ($325 million) in charges during the nine months related to cutting its work force.
In terms of regions, BMW said European sales developed unevenly. It said it saw "positive impetus" in some countries including Germany, France, Belgium and Luxembourg, but nine month European sales fell 5 percent overall.
In North America, the company sold 6 percent less cars than in the year ago quarter, "dominated by the ongoing financial crisis," and an increase in fuel prices, BMW said.
Meanwhile, the company saw "sharp growth" in central and Eastern Europe as well as in Latin America and Asia.
Total Asian sales were up 9.4 percent in the first nine months, with China, Hong Kong and Taiwan sales up 26 percent compared with the January-September period a year ago. Meanwhile, sales in Japan fell by 16 percent for the period
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