BMW Adjusts Strategies After Major Hit in Q3 Due to Market Volatility
BMW reported operating profit dropped 61% in the third quarter as it posted a result much worse than analysts' forecasts. The German carmaker blamed bottoming sales lines in China and brake issues for some of the main causes behind its huge profits drop, where shares fell to a two-year low by dropping 4.8%.
BMW's third-quarter operating profit is said to be 1.7 billion euros less than last year's figure of 4.35 billion euros. The result was not as expected as analysts had forecasted a slightly better result. The profit for BMW was forecasted at 1.8 billion euros. Revenue for the period declined by 15.7% at 32.4 billion euros below the analysts' expectation of 34.3 billion euros.
BMW Sees 33% Sales Drop in China but Remains Positive for 2024
The majority of BMW's slumping sales emanate from China as the company saw a 33% decline in sales reported in the third quarter mostly from a struggle in China's economy and growing rivalry in its auto markets. Similar stings are also affecting this region for Volkswagen, Mercedes-Benz, and Porsche.
But there is a critical reason more seriously offsetting the upward drive for BMW's profit, now over 1.5 million cars, it still has the problem of brakes remaining on these cars. That has affected delivery and they are piling up so far, waiting for deliveries. At this time BMW reported, shall be sent to the customer by year's end for some 320,000 of the vehicles held back.
Yet, BMW appears to be full of assurance about the future outcome since it continues declaring miserable performances. It says that it will achieve 6% to 7% of the operating margin for 2024 since it already looks on track. BMW's Chief Financial Officer Walter Mertl says that during the next fourth quarter, the sales volumes will increase and therefore support the automaker in gaining a better product mix, which, in turn, will positively influence its earnings.
BMW CEO Downplays US Market Fears Amid Trump Talks
BMW Chief Executive Oliver Zipse played down fears the company would lose critical access to the US market if Donald Trump were to become president. The US would always be an important region for BMW, he said. Tariffs can be offset by a boost in local sales in the United States, Zipse added.
If that were so, then the largest plant of the company in this small town of Spartanburg, South Carolina, or one of the other 30 plants around the country would help stand up to it.
BMW challenges it to make a joint effort toward the attainment of the goals set by the company for 2024 as it faces problems and delays in its products in China. It has operated its activities with care as it readies itself for more deliveries to improve earnings in the subsequent quarters.