Quarterly earnings before interest and tax (EBIT) came in at 2.26 billion euros (1.76 billion pounds), BMW said on Tuesday, well ahead of the 2 billion euros forecast in a Reuters poll.

"BMW continues to deliver very strong earnings and the outlook for the rest of this year remains very encouraging in our view," analysts at Evercore ISI said in a note on Tuesday.

Shares were indicated up 0.8 percent ahead of the 0800 GMT Frankfurt market open.

Sales of BMW branded cars rose 6.9 percent in the quarter, as demand for X1, X4 and X5 sports utility vehicles helped to lift BMW's automotive EBIT margin to 9.4 percent, higher than the 8.6 percent achieved by rival Mercedes-Benz Cars or the 9.2 percent seen at Audi.

Sales of the i3 electric car reached 10,199 vehicles by end September. In February, BMW said it had received "more than 11,000 orders" for the all electric i3 hatchback.

Between January and September, sales of new sportscars improved in all regions, including Europe, Asia and the United States, despite a 7.5 percent slump in sales for the Mini brand, and lower sales of the ageing BMW 3-series model.

Sales of new models like the X5 sports utility vehicle jumped 34 percent, keeping BMW's auto EBIT margin at the upper end the company's target of between 8 and 10 percent.

(Reporting by Edward Taylor; Editing by Georgina Prodhan)