* BMW says earnings targets include budget for incentives
* Discounts seen not as steep as in 2012
* Europe in particular could put pressure on BMW prices
(Adds details, background)
FRANKFURT, March 20 Luxury carmaker BMW
has budgeted for more discounts in 2013 and does not
see that threatening its outlook for stable earnings, its
finance chief said on Wednesday.
Discounting has been a widespread industry problem,
especially in Europe where demand is weak and some manufacturing
plants are only running at half their capacity.
Finance chief Friedrich Eichiner told analysts that the
company had budgeted for an increase of up to one percent in
2013 in the combined discounts given to customers over the
previous year's level.
"We cannot rule out that there is further pressure in the
pricing side coming, especially in Europe," Eichiner said during
BMW's annual analyst conference, broadcast over the internet.
Germany's BMW expects stable group pretax earnings but a
lower automotive operating margin dropping to 8-10 percent from
10.9 percent last year.
According to the CFO, BMW has factored into its expectations
the risk that sales prices could drop by 0.5 percent to 1
percent in 2013 after incurring a drop of 1 percent to 1.5
percent last year.
In addition to the volume of cars sold, carmakers' profits
are heavily impacted by the specific mix of its sales - how many
lower margin Mini Ones are sold versus higher margin BMW 7
Series, for example - as well any discounts.
Carmakers are often loath to provide guidance on the level
of their discounting, partly because it is sensitive information
that can help their competitors.
Premium carmakers BMW, Audi and Mercedes-Benz
all offer discounts but analysts warn that they risk
inflicting lasting damage to their image should they develop a
reputation for giving high incentives to customers.
Fiat Chief Executive Sergio Marchionne sparked a
public feud with Volkswagen that raged for two
months after he accused them of leading the industry into a
"bloodbath of pricing".
(Reporting by Christiaan Hetzner; Editing by Elaine Hardcastle)