BMW reported a lower than expected profit margin in its core automotive segment during the second quarter on Thursday, hitting its shares as heightened competition and weaker demand in China weighs on the sector.
The German carmaker's earnings before interest and tax (EBIT) margin in its car segment fell to 8.4% from 9.2% in the same period last year, falling short of the 8.7% expected by analysts, according to a company-compiled consensus.
BMW and its peers are under pressure in their key market China, where local carmakers are gaining share with lower cost electric vehicles (EVs), forcing their European rivals to slash prices.
The Munich-based carmaker saw a 4% slump in its China sales in the first six months of the year but performed better in the region than Volkswagen and Mercedes-Benz.
BMW expects the economic situation in China to stabilise in the third quarter.
Carmakers are under pressure to ramp up their EV offerings as regulatory deadlines from China to the EU and some US states will begin to ban sales of new fossil fuel emitting cars from the middle of the next decade.
BMW, whose heavy investment in model revamps also weighed on second quarter results, is seeing strong demand for its all-electric models, setting the company apart from its rivals.
“In our view, e-mobility will continue to be the core drive technology of the future and our primary growth driver,” CEO Oliver Zipse said in a speech to investors, adding BMW was the world's third largest e-car manufacturer.
BMW and its smaller brands Mini and Rolls-Royce increased sales of purely electric cars by a quarter to just more than 190,000 in the first half of 2024.
Pointing to broader structural headwinds in the car sector, finance chief Walter Mertl said BMW was seeing additional requests for support in its supply chain.
The group held its guidance for 2024, flagging a slight decline in pretax earnings, assuming the geopolitical and macroeconomic situation does not deteriorate, Mertl said.
The company's full-year target range for the EBIT margin in its car segment is 8-10%.
China woes hit BMW as profit margin falls
Image: Leonhard Simon/Getty Images
BMW reported a lower than expected profit margin in its core automotive segment during the second quarter on Thursday, hitting its shares as heightened competition and weaker demand in China weighs on the sector.
The German carmaker's earnings before interest and tax (EBIT) margin in its car segment fell to 8.4% from 9.2% in the same period last year, falling short of the 8.7% expected by analysts, according to a company-compiled consensus.
BMW and its peers are under pressure in their key market China, where local carmakers are gaining share with lower cost electric vehicles (EVs), forcing their European rivals to slash prices.
The Munich-based carmaker saw a 4% slump in its China sales in the first six months of the year but performed better in the region than Volkswagen and Mercedes-Benz.
BMW expects the economic situation in China to stabilise in the third quarter.
Carmakers are under pressure to ramp up their EV offerings as regulatory deadlines from China to the EU and some US states will begin to ban sales of new fossil fuel emitting cars from the middle of the next decade.
BMW, whose heavy investment in model revamps also weighed on second quarter results, is seeing strong demand for its all-electric models, setting the company apart from its rivals.
“In our view, e-mobility will continue to be the core drive technology of the future and our primary growth driver,” CEO Oliver Zipse said in a speech to investors, adding BMW was the world's third largest e-car manufacturer.
BMW and its smaller brands Mini and Rolls-Royce increased sales of purely electric cars by a quarter to just more than 190,000 in the first half of 2024.
Pointing to broader structural headwinds in the car sector, finance chief Walter Mertl said BMW was seeing additional requests for support in its supply chain.
The group held its guidance for 2024, flagging a slight decline in pretax earnings, assuming the geopolitical and macroeconomic situation does not deteriorate, Mertl said.
The company's full-year target range for the EBIT margin in its car segment is 8-10%.
MORE:
BAIC's Gqeberha plant operating at near standstill
Toyota posts 17% Q1 profit rise on weak yen; matches expectations
China helps Italy’s Brembo to defy auto industry weakness
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.
Most read
Latest Videos