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German high end auto makers riding high

Strong results by BMW demonstrate recovery by German luxury car makers this year, with the firm reporting a seven fold leap in quarterly profit keeping it ahead of Audi and Mercedes.

Other automotive brands such as Honda of Japan and France's Peugeot have also benefited from the recent upturn in the global economy, as have heavy truck makers like MAN, Mercedes and Scania as logistics demand grows worldwide. The industry nonetheless expects the fast lane will come to an end later this year as major markets such as China begin to slow.

Dr Willi Dietz automotive professor from the German Institut fuer Automobilwirtschaft said that "We cannot say this will last for the next 12 months."

The market for heavy vehicles is particularly susceptible to economic trends and premium carmakers will also watch to see how Volvo fares now that it is owned by Geely of China. That will give the Swedish manufacturer a big footprint in the world's largest auto market. For the moment, however, some premium car makers are reporting breath-taking profit increases.

BMW posted a second quarter net profit of EUR 834 million as compared with EUR 121 million in the same period in 2009. The results shattered the expectations of analysts polled by Dow Jones Newswires, who had forecast profits of EUR 674 million. BMW's operating profit before interest and tax soared to EUR 1.717 billion from just EUR 169 million and the group reiterated its unit sales forecast of EUR 1.4 million in 2010.

Mr Norbert Reithofer CEO of BMW said that the group would be operating at more than 90% capacity this year. He added that "European automakers have been boosted from the euro's fall in value against the dollar which greatly improves their situation in most of the Asian and North American markets."

Audi expects to sell more than 200,000 cars in China, and top its 2008 record of one million vehicles worldwide. Honda reported a record quarterly profit of USD 3.15 billion as Japanese car sales pursued a year long upward trend in July, and Peugeot pushed back into the black with a first half profit of EUR 780 million.

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