BMW trims 2010 U.S. sales outlook

MILAN/DETROIT (Reuters) - BMW (BMWG.DE) expects a slower recovery in 2010 U.S. auto sales than anticipated just a few months ago with consumer debt remaining a drag on the developing rebound, the automaker's president for North America said on Monday.

"I think it will be a slower recovery than I had originally anticipated," Jim O'Donnell, president of BMW North America, said at the Reuters Autos Summit in Detroit.

"There is here still is a lot of consumer debt out there," O'Donnell said. "That is keeping the average consumer from going out and making big purchases."

O'Donnell said he expected the U.S. auto market would recover to top 11 million vehicles in 2010 compared with just over 10 million expected this year.

BMW had forecast 2010 sales of 11.5 million units as late as September, but O'Donnell said now that was more likely to represent the top of the potential sales range for next year.

O'Donnell is slightly more optimistic than Toyota's U.S. brand chief Bob Carter, who told the summit earlier he was expecting total U.S. sales to top 11 million units.

BMW's October car sales are likely to be just below last year's 20,000 units, he said, and compared with September's 19,205 units. That was down 24 percent on the year ago, slightly outperforming the overall fall of 27 percent.

He said BMW's competitors in the luxury segment, Mercedes (DAIGn.DE) and Lexus (7203.T), were cutting prices despite the declining dollar, with average reductions on Mercedes' new E class of 8 percent.

"Now that's significant wherever you are against the backdrop of a declining dollar. You've almost got deflation in prices, not inflation," O'Donnell said. He added that BMW would keep an eye on the marketplace but did not plan to follow suit. "That's a slippery slope," he said.

He said that globally there was still a lot of overcapacity in the industry. "It's clear a lot more capacity could come out. Nobody has really disappeared," O'Donnell said.

The car maker, which also owns the small urban Mini brand, aims for 13.5 percent to 15 percent of the luxury segment of the North American market next year, O'Donnell said, with a new marketing campaign starting in February.

"If we lost a little bit of segment share I wouldn't be too concerned … with 13.5 percent to 15 percent I'd be very happy," he said.

The company aims to increase marketing expenses around 10 percent next year and spend less on incentives as a result, O'Donnell said.

"Say 10 percent but I'd like to do more ... it means spending less on sales allowances," he said.

For the company's iconic Mini brand, which has attracted buyers mainly in urban centers in the United States, O'Donnell is hoping to boost sales to 100,00 units in seven years and would increase dealerships to around 120 from the current 88 to support that.

"We'll build it up slowly -- it's very easy to become over-dealered and then it's very expensive to back off that," O'Donnell said.

(Additional reporting by Kevin Krolicki; Editing by Phil Berlowitz)