BMW Group maintained its position as the world's leading premium car company, delivering 2.37 million vehicles in 2016, 5.3 per cent more than the year before. The core BMW brand sold more than 2 million vehicles in a calendar year for the first time ever.

This  points to a solid fourth quarter, and follows an 11.4 per cent increase in earnings per share in the first nine months (to September 30) of the financial year, and a 3 per cent rise in revenue to €69.2 billion ($97.22 billion).

Notable highlights of 2016 were electrified vehicles sales of 62,000 units (2.6 per cent of the total). BMW is targeting sales of 100,000 in 2017, or 60 per cent growth.

The company is well positioned to ride the electric wave, offering seven electrified vehicles. The group improved the range of the BMW i3 by almost 50 per cent last year, and plug-in hybrid versions of the BMW 5 Series and the MINI Countryman are due in the  next few months.

A trend towards sports utility vehicles also provided a boost last year, as one in three BMWs sold was an X model vehicle. There was a 22 per cent increase in X3 BMWs sold in 2016, to come in at 644,992.

The BMW 2 series increased sales by 25 per cent to 196,183 units, while sales of the BMW 7 series rose 69 per cent to 61,514 units. The new BMW 5 Series was launched  this month and will be another sales growth driver this year. Mini sales also hit a record with a 6.4 per cent increase to 360,233, while Rolls-Royce (owned by BMW since 1998) had the second highest sales in its 113-year history.

Increase in China

Geographically, sales in Europe rose 9.2 per cent to hit 1.091 million, while mainland China saw an 11.3 per cent increase to 516,334 vehicles.

A competitive US market, though, reduced BMW and Mini sales by 7.2 per cent to 458,982 in the Americas. New competition from the likes of Tesla is a threat and the group has yet to produce a mid-market electric saloon that can take on the Model S.

BMW's strategy has been to offer electrified model options and pursue the i-sub-brand for fully electric drive vehicles. The group is also said to be making an all-electric 3 Series, which would help it compete.

Last year, the US market accounted for 15.5 per cent of the group's BMW and Mini brand sales. The threat of trade tariffs for cars imported into the country from Mexico is not, therefore, a significant threat to the company in our view. BMW also has a manufacturing plant in the US that exports vehicles around the world.

We continue to view BMW as a well-run company and note the ongoing progress on electrification. That said, peak sales in the US and increasing competition from car makers like Tesla suggests that there may be challenges ahead.

However, the eurozone economic recovery appears to have much further to go and Europe is BMW's largest market by vehicle sales. A weaker euro should also continue to underpin robust sales in Asia. In this light, the shares look cheap, trading on eight times earnings, with a 4 per cent dividend yield.

Greg Smith is head of research at investment research and funds management house Fat Prophets. For a free trial to Fat Prophets' daily market commentary please click here. Interests associated with Fat Prophets declare a holding in BMW.