BMW AG, the world’s largest premium carmaker, is recalling about 1.3 million cars for repair worldwide due to a possible problem with a battery cable cover in the trunk, the carmaker said on Monday.

The recall affects 5- and 6-Series BMWs built between 2003 and 2010, BMW said in a statement.

“In some remote cases, the battery cable cover inside the boot of these vehicles may be incorrectly mounted,” it said.

“This can result in the electrical system malfunctioning, the vehicle failing to start and, in some cases, to charring or fire,” the company said, adding it was not aware of any accidents or injuries to people due to the problem.

Fewer than 1 percent of the cars BMW has so far inspected for the issue have exhibited the problem, a BMW spokesman said. So far, the spokesman said, there have been no reports of fires, reported Reuters.

BMW said it was writing to car owners. The repair procedure in a BMW partner workshop would take about 30 minutes to an hour and would be free of charge to customers, it added.

The recall affects about 368,000 cars in the United States and about 293,000 cars in Germany, BMW said. Another 109,000 cars are subject to the recall in Britain and about 102,000 in China, BMW said.

In some European countries, the trunk is called the car’s boot.

Bayerische Motoren Werke AG’s BMW brand outsold Daimler AG’s Mercedes-Benz last month to cement its victory as the top luxury brand in the U.S. for 2011.

BMW’s sales rose 15 percent to 26,834 in December compared with a year earlier, the Munich-based automaker said today in a statement. With total 2011 sales at 247,907, BMW outsold Mercedes by 2,715 vehicles, reported Bloomberg.

“BMW Group sales momentum has been increasing all year and this new burst of consumer confidence filled our dealer showrooms putting” BMW “over the top,” Ludwig Willisch, chief executive officer of BMW of North America, said today in a statement.

The battle between BMW and Mercedes to replace Toyota Motor Corp.’s Lexus as the top luxury brand in the U.S. after 11 years was helped by a lack of the Japanese automaker’s production following the March earthquake and tsunami in Japan.

The competition was so intense between BMW and Mercedes that each side refused to release their sales results yesterday until the other went first, two people familiar with the situation said. Other automakers announced December and full- year U.S. sales yesterday.

Researcher Autodata Corp. released estimates yesterday for the manufacturers using “credible industry sources,” Autodata said in an e-mail. Autodata’s results showed BMW in the lead.

Ultimately, Mercedes went first, releasing its results on PR Newswire at 8:56 a.m. New York time. BMW followed posting its release on its website about 11 a.m.

Mercedes U.S. deliveries, aided by a refreshed C-Class sedan and redesigned M-Class sport-utility vehicle, rose 28 percent to 25,701 vehicles in December, Mercedes said in its statement. Deliveries of Mercedes vehicles for the year rose 13 percent to 245,192 in the U.S.

The results exclude Daimler’s Mercedes Sprinter and Freightliner vans, and Smart cars and BMW’s Mini brand, which aren’t luxury vehicles. The 2011 full-year figures also exclude sales of the Maybach brand.

While some automakers in the past have delayed releasing monthly results, “this is unusual,” Jesse Toprak, an industry analyst with TrueCar.com, a Santa Monica, California-based website that tracks auto sales, said yesterday in a telephone interview. “I don’t really recall this happening from two automakers who are clearly going head-to-head against each other. It’s too much of a coincidence.”

Lexus sales fell 8 percent to 25,355 last month and 13 percent to 198,552 to end the year, the Toyota City, Japan-based brand said.

Industrywide sales rose 10 percent to 12.8 million, Autodata estimated.

While BMW had led the sales race going into December, its lead over Mercedes had narrowed to 1,600 after November.

Both automakers increased incentives in November and carried forward customer discounts into December, according to Ivan Drury, an industry analyst with Edmunds.com, a Santa Monica, California-based website that tracks automotive discounting.

Mercedes increased incentive spending in November by 39 percent compared to a year earlier and BMW’s incentives rose 25 percent, according to Autodata. Many of those discounts and incentives are on the C-Class and 3-Series, which are the automakers’ top sellers.

Rivals have noticed the discounting.

“They’ve been outspending us — even with some relatively newer products,” Kurt McNeil, Cadillac’s vice president of sales, said yesterday in a telephone interview. BMW has offered $400 to $600 a car more than the General Motors Co. brand, he said, and Mercedes’s discounts exceeded Cadillac’s by more than $1,000. “They’ve been bringing it from an incentive standpoint.”

Cadillac sales for the year rose 3.7 percent to 152,389, the Detroit-based automaker said. In December, deliveries fell 2.7 percent to 16,259.

Mercedes surged after BMW ended the third quarter leading its German rival by 7,817 vehicles sold in the U.S.

Two new products by Mercedes, a refreshed C-Class car and M-Class sport-utility vehicle, arrived in showrooms in September.

C-Class sales, which included a new two-door version of the compact car, rose 88 percent in October and 113 percent in November compared with the same months a year earlier. The C- Class’s direct competitor at BMW, the 3-Series, saw sales declines of 9 percent and 15 percent in October and November, respectively.

A new version of the 3-Series is being introduced next year and Jim O’Donnell, then-head of BMW’s U.S. operations, had warned in August that Mercedes could gain ground as BMW wound down the old version.

Both automakers increased incentive spending on their compact offerings in November, according to Autodata.

Mercedes’s average incentive spending per C-Class rose to $4,234 that month from $3,122 in October. The average incentive spending on that vehicle for the year through November was $3,516 compared to $3,237 a year earlier.

BMW’s incentive spending on average rose to $4,289 per 3- Series last month from $3,367 in October, according to Autodata. For the year through November, spending on that vehicle averaged $3,167 compared to $3,370 a year earlier.

Lease deals are important in selling compact luxury cars because many customers shop by monthly payment, Drury of Edmunds said. In November, 65 percent of Mercedes’s C-Class buyers were lease customers, as were 60 percent of BMW’s 3-Series customers, according to Edmunds data.

“The main one that people think about is what am I paying per month, they kind of forget sometimes that some of these leases require $4,000, $5,000 down,” Drury said.

BMW advertised last month 3-Series monthly lease payments on its website as low as $299 for shoppers with good credit. Mercedes has deals as low as $349 per month for its C-Class, its website said. BMW spent on average of $5,236 in incentives on 3- Series leases while Mercedes spent $2,385 on C-Class leases in November, Edmunds said.

“We increased our incentive spend but we did not throw the kitchen sink at the month of November,” Steve Cannon, then-vice president of marketing for Mercedes in the U.S., said during a Dec. 1 interview. He has since been named chief executive officer of Mercedes’s U.S. operations. Incentives are “in-line with what we always do for our year-end event,” he said.

In November, Mercedes began offering the ability to pull current customers out of their leases as much as eight months early to get them into new vehicles, such as the C-Class, Bernie Moreno, a Mercedes dealer near Cleveland, said last month in an interview.

“Before they only used to waive three or four payments,” he said of Mercedes. Now he can call up a customer with the new lease offer and, Moreno said, “what happens is that customer who maybe would’ve considered a BMW and Audi, they get the bug to buy a car now but BMW isn’t going to waive their eight Mercedes payments. So, we keep them in a Mercedes.”

This year, BMW and Mercedes will probably see greater competition from Lexus and Volkswagen AG’s Audi, Edmunds’s Drury said.

“I don’t think it should be so clear cut,” Drury said of the luxury race this year. “I’m picturing that the sales taken from Lexus and Audi should break up some of the closeness going on.”

Mark Templin, head of U.S. Lexus sales, said yesterday that the brand will grow about 20 percent this year with new products. “We expect to be the fastest growing luxury brand in the industry,” Templin said in a conference call. “We’ll have a huge volume swing especially because of the launch of nine new vehicles. it gives us a big push this year.”

U.S. deliveries of Audi, the premium brand of Wolfsburg, Germany-based Volkswagen, rose 20 percent to 12,655 vehicles last month, the company said in a statement. The brand’s sales for the year rose 16 percent to 117,561 last year, helped by the revised A6 sedan.

Porsche AG, the Stuttgart-based automaker, sold 1,834 vehicles in the U.S. last month, a 29 percent decrease, the company said in a statement yesterday. U.S. sales for the year rose 15 percent to 29,023.

Nissan Motor Co.’s Infiniti sold 98,461 vehicles last year, 4.8 percent fewer than in 2010, the Yokohama, Japan-based company, said in a statement. Deliveries in December fell 12 percent to 10,990.

Honda Motor Co., based in Tokyo, said in a statement that sales for its Acura brand fell 15 percent to 13,129 last month. The brand, also hindered by the Japanese disasters, saw U.S. sales fall 7.7 percent for the year to 123,299.

Ford Motor Co. sold 8,403 Lincolns in December, a 4.3 percent increase from a year earlier, according to a statement from the Dearborn, Michigan-based automaker. The brand’s sales finished the year down 0.2 percent to 85,643 U.S. sales.

Land Rover deliveries rose 20 percent to 38,099, while Jaguar sales dropped 8 percent to 12,276, the brands said in an e-mailed statement. They are owned by Mumbai-based Tata Motors Ltd.

BMW’s Willisch in a November interview reiterated that he expected his brand to finish on top in 2011.

“Competition is tough,” he said. “If you’re in the No. 1 position, everyone else would like to be in your place.”

BMW AG and Mercedes-Benz are locked in an expensive race for bragging rights as this year’s top-selling luxury car in the U.S. market, and customers are benefiting.

The two German luxury-car brands this year have zoomed past Toyota Motor Corp.’s Lexus division, which has reigned as America’s top-selling luxury auto maker since 2000, and are running neck and neck to grab the U.S. crown, reported The Wall Street Journal.

Heading into December, BMW had sold 221,073 cars and sport-utility vehicles in the U.S. market, a rise of 12.3 percent, and just 1,582 more than Daimler AG’s Mercedes, whose sales are up 11.8 percent from a year ago.

The battle is being fought by lease incentives and purchase discounts, helping customers such as Mike Goodstein, who lives in a Columbus, Ohio suburb, nab a great lease deal on a BMW 535xi.

“I bought it now because, quite frankly, around the holidays is the best time of the year to buy one. They have all kinds of rebates and holiday cash,” said the 47-year-old.

Luxury car maker always have year-end sales, of course, counting on well-heeled customers to spend annual bonuses. But this year’s campaign is especially hot because Toyota’s troubles have given rivals their first fighting chance in years to grab the U.S. sales crown. Mercedes also is fighting off Volkswagen AG’s Audi globally for second place after BMW, making its U.S. showing all the more important.

Sensing an opportunity to grab market share, BMW and Mercedes have quietly offered dealers discounts they could apply selectively when they have chances to steal customers away from competitors. Now, with the title of top-selling brand on the line, both BMW and Mercedes have hit the gas on incentives in hopes of nosing the other out.

Both are offering discounts for around $4,800 a vehicle, according to research firm TrueCar.com. Most of the discounts are more subtle than the straight cash rebates typically offered by mass-market brands like Ford and Chevrolet.

BMW and Mercedes, for example, are waiving the first two month’s payments on leases and loans for many models, which can give buyers a price break of up to $2,000. They also are offering subsidized interest rates of as low as 0.9 percent, and discounts for returning customers, according to summaries distributed to dealers. On lease deals, they often assume a high residual value after the vehicles are returned, which helps lower monthly payments.

For instance, buyers can get a 30-month lease on a Mercedes C250 sedan for $349 a month.

Mike Jackson, chief executive of AutoNation Inc., the largest dealer by sales in the U.S., said its sales of premium vehicles rose 35 percent in November, powered mostly by Mercedes and BMW. The German car makers have launched updated models with new technology that few others can match.

“The new vehicles haven’t just been home runs, they have been grand slams,” Mr. Jackson said.

Moreover, upscale brands that trail BMW and Mercedes in technology are struggling. Sales for Honda Motor Co.’s Acura division and Infiniti, owned by Nissan Motor Co., are both down, and Ford Motor Co.’s Lincoln sales are flat. General Motors Co.’s Cadillac sales are up, but only by 4.5 percent.

In Fort Lauderdale, Fla., Melissa Foster drove her late model Mercedes C-Class to her dealer and found a bargain she couldn’t pass up on a new C250. “My husband just loves his new car,” said Ms. Foster, 39, of Fort Lauderdale, Fla. “I went in for a service and ended up coming home with a new car.”

Peter Miles, sales chief for BMW’s North American arm, played down the duel, saying the auto maker is getting a lift from a redesigned X3 compact SUV and a new all-wheel-drive version of its 5 series sedan.

While the No. 1 spot in U.S. sales would be “a nice recognition from the industry, I’m not sure our customers pay attention to that,” Mr. Miles said, adding: “I am sure there is a little friendly competition going on” between BMW and Mercedes.

Bayerische Motoren Werke AG, the world’s largest maker of luxury vehicles, raised its profit and sales forecasts, saying strong second-quarter demand across global auto markets will prevail in the next months.

BMW’s automotive division now anticipates that earnings before interest and taxes will exceed 10 percent of revenue in 2011 on a sales of more than 1.6 million vehicles, the company said. The previous forecast was for an Ebit margin wider than 8 percent and deliveries in excess of 1.5 million units, reported Bloomberg.

“The revision is better than expected,” said Aleksej Wunrau, an analyst at BHF-Bank AG in Frankfurt with a “market weight” rating on BMW. “A double-digit margin is great news. Demand for luxury cars is undeniably in place and BMW is clearly benefiting. They’re heading for excellent financial results.”

Chief Executive Officer Norbert Reithofer is looking to hire 2,000 people this year as BMW seeks to add capacity in emerging markets and fend off Volkswagen AG’s Audi brand, which has outsold Daimler AG’s Mercedes-Benz this year. Munich-based BMW said today it’s aiming to strike a “reasonable balance” in sales volumes between Europe, Asia and the Americas.

Shares of the maker of BMW, Mini and Rolls-Royce brand cars jumped almost 4 percent from their intraday level following the release and closed at 67.24 euros in Frankfurt, up 0.7 percent.

“Thanks to strong demand on the international auto markets during the second quarter and for the full year, BMW now expects that business performance and earnings will be significantly better than previously forecast,” the group said in a statement.

Full-year pretax earnings will show a “greater improvement” than originally predicted, the carmaker said, while more attractive market conditions and a less acute risk situation will allow its Financial Services unit to post second- quarter earnings of more 100 million euros ($140 million).

Chief Financial Officer Friedrich Eichiner said on May 4 that second-half growth will likely slow because of tougher year-earlier comparisons, while models including an overhauled version of the 1-Series compact and a new Mini coupe will add about 500 million euros to expenses.

BMW said today that sales and earnings growth in the automotive segment “is likely to be dampened” during the second half by changes in the model portfolio, as well as new products and the production start-up of successor models.

BHF’s Wunrau said that negative effects from model changeovers and one-time items “won’t cause profitability to slump as initially expected.”

BMW is expanding its lineup to reach a goal of selling more than 2 million cars and SUVs annually by 2020. The “I” sub- brand will debut in 2013 with the i3, a battery-powered city car, and the company is also planning the i8, a hybrid supercar based on the Vision Efficient Dynamics prototype.

BMW said today it will continue to target a return on capital employed in excess of 26 percent and an Ebit margin of between 8 and 10 percent in 2012. The number of vehicles handed over to customers jumped almost 20 percent to 833,366 in the first half. Second-quarter results will be released on Aug. 2.

Growing demand for luxury vehicles also spurred sales at Porsche SE’s automotive division, which today reported a 29 percent gain in first-half deliveries to 10,667 cars. Volkswagen AG, seeking to merge with Porsche, said today six-month sales of namesake-brand vehicles rose 12 percent to 2.53 million units.

BMW’s new guidance underlines its ability to benefit from strong demand, though the potential for earnings improvement may be “limited,” Jasko Terzic, an analyst with Frankfurt-based DZ Bank AG, said in a note, adding that he favors Daimler and VW.

FRANKFURT – Germany’s luxury-car makers posted record sales in the first half of the year and expect growth to continue in coming months, fueled by booming demand in emerging markets.

“We have just achieved another record month in sales and the best six months in our company’s history,” BMW AG sales chief Ian Robertson said in a statement Thursday.

However, he said the growth may moderate, and auto analysts said investors should take caution given the sector’s high margins, reported The Wall Street Journal.

“Due to the model cycle and the year-on-year base effect, we do anticipate a somewhat slower rate of growth in the second half of the year,” BMW’s Mr. Robertson said, reiterating previous comments.

The premium-car segment staged a powerful comeback in recent quarters following a steep downturn as sales soared in China and a market recovery continued in the U.S.

BMW AG, the world’s best-selling luxury-car maker, said its BMW brand posted a 12 percent rise in sales in June to 134,432 cars from 119,663 a year earlier.

Volkswagen AG’s Audi unit overtook Daimler AG’s Mercedes-Benz brand as the world’s second-largest luxury car maker by sales volume in the first half.

“The first half of the year was clearly better than we had expected,” said Audi sales chief Peter Schwarzenbauer. Audi’s sales in June rose 19 percent to 117,650 cars from 99,263 a year earlier, and were up 18 percent in the first six months at 652,950 cars from 554,864.

Earlier this week, Mercedes-Benz posted sales of 610,531 cars, up 9.7 percent from 556,691 vehicles. The Stuttgart-based company, however, still generates more revenue per vehicle on average than its two larger German rivals.

Sanford Bernstein analyst Max Warburton cautioned in a recent note that “in general enthusiasm has waned” among investors. He added “most investors tell us we’re naive to believe margins will remain at a high level and daft to argue for the possibility of re-rating.”

He said the sector’s history supports the cynics as “returns are infamously volatile and periods of decent profitability are usually brief.” He said the sector’s performance is highly correlated with earnings momentum and fundamental valuation is rarely discussed.

Profit margins among premium auto makers “are at historical highs, cash flows have never been better and balance sheets are strong,” although valuations remained below long-term averages, said J.P. Morgan analyst Ranjit Unnithan.

“Clearly, one must assume that investors fear that there is something unsustainable about current margins and cash flows,” he said.

The concerns could relate to general sales volumes, product mix and the vulnerability of margins in case China demand weakens, or to future investment demands, he said.

China played a key role for the sector’s rebound as profit margins there are high and larger, more lucrative vehicles account for a large chunk of sales.

Mr. Warburton, however, believes the German premium car makers still have some upside potential despite a lackluster performance of the overall European auto sector so far this year.

The Euro Stoxx auto sector index has gained about 7 percent since the beginning of the year, which is only slightly better than the overall market after a stellar two-year period of outperformance in 2009 and 2010. In 2010, by comparison, the sector surged around 45 percent, due mainly to strength in the shares of BMW and Volkswagen.

Mr. Warburton said the macroeconomic situation remained a concern, but “if the auto makers, particularly the Germans, can continue to deliver returns at or near current levels, then we believe the stocks can still move up.”

Bayerische Motoren Werke AG’s BMW brand topped Daimler AG’s Mercedes-Benz and other luxury auto makes in the U.S. last month, widening its lead for 2011 as the European automakers boosted discounts.

BMW’s U.S. deliveries, helped by sales of sport-utility vehicles and the new 5-Series sedan, rose 16 percent from a year earlier to 20,651, the Munich-based automaker said yesterday in a statement. Deliveries for the first five months of the year rose 13 percent to 92,068 vehicles, to lead Mercedes’ 90,274 sales and the 77,237 deliveries by Toyota Motor Corp’s Lexus, reported Bloomberg.

“BMW and Mercedes-Benz clearly will be on a photo finish for the rest of the year,” Jesse Toprak, vice president of industry trends at TrueCar.com in Santa Monica, California, said in a telephone interview. “Lexus, for the first time in many years, is clearly out of the running for the top spot.”

Mercedes’ discounts rose by 27 percent per vehicle in May and BMW increased its incentives by 6.7 percent, while discounts on Lexus models fell 51 percent, according to Truecar.

Lexus, based in Toyota City, Japan, has been the top- selling luxury auto brand in the U.S. on an annual basis for the past 11 years. Its lead over BMW narrowed to 9,216 last year, less than half the 19,473 gap in 2009. Mercedes finished in third place last year. Lexus sales last month tumbled 45 percent to 12,305, the company said in a statement.

“It would appear Lexus has suffered from a lack of supply,” Jim O’Donnell, head of BMW’s U.S. sales operations, said in an interview. “That’s unfortunate, but it’s one of those things.”

U.S. sales of BMW’s 5-Series models rose 84 percent last month when X3 SUV deliveries more than tripled to 2,350, the company said.

U.S. dealers sold 18,886 Mercedes-Benz cars and SUVs last month, 1.8 percent more than a year earlier, Stuttgart, Germany- based Daimler said in a statement.

The results exclude Daimler’s Sprinter vans and Smart cars and BMW’s Mini brand, which aren’t luxury vehicles.

General Motors Co.’s Cadillac luxury division’s sales fell 5.7 percent to 11,623 last month, as CTS sales rose 23 percent. Sales of the STS and DTS sedans, production of which ended this year, fell 68 percent and 34 percent, respectively.

Fleet sales fell 44 percent as GM tries to wean itself off such sales, said Kurt McNeil, Cadillac’s vice president of sales. Cadillac sold about 15 percent of its models to fleet buyers in May and aims to reduce that to about 10 percent by the end of the year, Todd Davis, a spokesman, said in an e-mail.

“A lot of that we drove with DTS and STS winding out of the portfolio,” McNeil said of the fleet-sales decline in a telephone interview yesterday. “The challenge is to just stay pure with our new products, which we are completely committed to doing.”

Nissan Motor Co.’s Infiniti sold 6,389 vehicles, a 21 percent decline from a year earlier, the company said in a statement.

Honda Motor Co., based in Tokyo, said in a statement that sales for its Acura brand fell 24 percent to 9,000 last month.

U.S. deliveries of Volkswagen AG’s Audi brand rose 14 percent to 10,457 vehicles, the company said in an e-mail.

Ford Motor Co. sold 7,399 Lincoln luxury vehicles in May, 4.6 percent fewer than a year earlier, according to a statement from the Dearborn, Michigan-based automaker.

Land Rover deliveries rose 6.7 percent to 2,891, while Jaguar sales gained 32 percent to 1,271, Mumbai-based Tata Motors Ltd. said in an e-mailed statement.