On Thursday, August 1st, German automotive giant BMW released its second-quarter financial report. The report indicated that due to a decrease in sales in the Chinese market, the profit margin of its core automotive division was lower than expected.
The automotive division of this Munich-headquartered automobile manufacturer saw its earnings before interest and taxes (EBIT) drop from 9.2% in the same period last year to 8.4%, below analysts’ expectation of 8.7%. The profit margin of the automotive division in the second quarter was at the lower end of the company’s annual target range of 8% to 10%.
In the second quarter, the automotive delivery volume was 618,743 units, a decrease of 1.3% compared to 626,726 units in the same period last year.
In a press release titled “Continuing to Maintain Profitability in Turbulent Environment,” BMW stated that despite the decline in sales, the revenue from the automotive business segment in the second quarter was €32 billion, a 1.4% increase from €31.6 billion in the same period last year.
This was mainly attributed to double-digit growth in sales of pure electric vehicles (BEV) as well as higher-priced BMW and BMW M models. In the first half of this year, BMW delivered nearly 180,000 pure electric vehicles, a 34.1% increase compared to the previous year, ranking third in global shipment volume.
This offset the drop in sales in the Chinese market due to increased competition and weak consumer demand. In the first half of this year, BMW’s sales in China fell by 4%, but the performance in the region still outperformed Volkswagen and Mercedes-Benz.
BMW also noted that the company’s investment level has been maintained at a high level, with projected peak development spending this year on model upgrades and electric vehicles.
The company stated that due to manufacturing and fixed costs, especially higher personnel costs and research and development expenses compared to the previous year, they anticipate a slight decrease in the Group’s EBIT for the full year of 2024.
BMW and its peers are facing significant competitive pressures in their key market – China. Domestic Chinese automakers are engaging in price wars to capture market share with low-priced electric vehicles, forcing foreign competitors to either reduce prices or lose market share.
On Thursday, August 1st, Oliver Zipse, Chairman of the BMW AG Management Board, stated at the company’s headquarters in Munich that despite the challenges, the company has achieved high profitability within the annual target range for ten consecutive quarters.
He mentioned that the company will continue to vigorously develop its flagship project – the new generation electric vehicle brand Neue Klasse, aiming to elevate BMW to a new technological level starting from 2025.