BAYERISCHE MOTOREN WERKE 
MUNICH (Reuters) - BMW AG (>> Bayerische Motoren Werke AG) has signalled it may ease back on efforts to protect market share at the expense of margins, after surprising investors with a conservative view on profit growth this year.
The Bavarian car maker has ranked as the world's best-selling premium car brand for almost a decade, amid signs that defending its crown is starting to erode profits as rivals like VW-owned Audi (>> Volkswagen AG) and Mercedes (>> Daimler AG) give chase.
BMW wants to remain the best-selling volume carmaker, Chief Executive Norbert Reithofer said on Wednesday, while emphasising that profit quality took priority over absolute sales.
"Volume is not everything and maintaining the same level of growth is not everything," Reithofer said. "There are always internal discussions about volume, these tend to end with the conclusion that we cannot surrender market share, but only if you have a good margin contribution."
Fourth-quarter results revealed the profit margin for BMW's car division had fallen to 8.2 percent, from 9.2 percent a year earlier, despite posting a new record for sales of premium sportscars.
BMW shares, which hit a record on Tuesday, were down 3.5 percent at 1320 GMT after the company, whose brands also include Mini and Rolls-Royce, said it expected a "solid" rise in sales volume and pretax profit this year, equivalent to a medium to high single-digit percentage increase.
Although BMW Group expected to deliver record profits and sales this year, analysts said the guidance was conservative as it had stopped short of forecasting a "significant" rise, or growth of more than 10 percent, as it had done a year ago.
"Investors may be expecting too much," analysts at Morgan Stanley said in a note, reiterating an "overweight" rating on the stock.
Reithofer told reporters: "As always, our forecasts assume the economic conditions worldwide remain stable ... However many uncertainties remain. Important markets like China are losing momentum."
BMW said sales in China, the world's largest car market, will continue to grow by a single-digit percentage this year after reaching more than 400,000 last year.
Falling capital expenditure and signs BMW is putting greater emphasis on quality of sales, by looking at profit rather than absolute volume, should pay off in the long run, analysts said.
"This should result in materially stronger cash generation enabling management to return more cash to shareholders on a sustainable basis," analysts at Evercore ISI said in a note.
BMW is investing in technologies such as electric and hybrid drivetrains to help cut average vehicle fleet emissions to 95 grams per kilometre in Europe by 2021, from a current average of 130 grams.
In 2014, the company spent 4.57 billion euros on research and development. Overall capital expenditure will fall closer to below 7 percent of group revenue, from around 7.6 percent last year.
Reithofer received 7.49 million euros in total pay for 2014 according to the group's annual report.
(Editing by Maria Sheahan and David Holmes)
By Edward Taylor
