BMW, the world's leading luxury car-maker, yesterday said it would make a record €4bn (£2.8bn) pre-tax profit and come close to its target of selling 1.4m cars this year - two years ahead of schedule.

The continuing success of BMW, which sold 1.33m cars last year, outselling Mercedes for the second year in a row, contrasts with steep declines at Jaguar, which saw sales plunge 25% in 2005 to 89,804 and is said to be losing £1m a day. The British firm, part of Ford's premier automotive group, which includes Volvo and Aston Martin, dragged down profits at the US group's European operations to $36m.

Shares in BMW jumped more than 5% on the forecast €4bn pre-tax earnings - a 22% increase. Helmut Panke, chief executive, said the rise in earnings included a €325m gain from the disposal of shares in aero-engine maker Rolls-Royce in which BMW holds a 1.8% stake. Analysts said even discounting this gain BMW's profit target was 10% better than expected.

Michael Ganal, head of sales and marketing, came close to admitting that the 2008 target of 1.4m global sales could be reached this year - despite the expected loss of 20,000 Mini sales because of the four-week shutdown of BMW's Oxford plant to allow a £100m modernisation. Mr Panke, who said group sales had risen 14% in the first two months, declared that BMW intended reaching record sales in 2006, with Mr Ganal pointing to growth of about 5%.

The group completed a €760m share-buyback programme last month and is paying out €1.2bn to investors in dividends. The annual meeting in May will be asked to approve further buybacks of up to 10% but executives refused to say how much of this they planned to use.

BMW, which paid £3bn for Rover, said several Chinese firms had expressed an interest in buying the Rover brand name. Mr Panke said no decisions had been taken and any sale would require the approval of Ford, which owns Land Rover.