BMW Lowers Automaking Profit Margin Outlook Amidst Falling Sales
BMW AG forecasts a lower end of guidance for its 2024 automaking profit margin due to declining sales of premium cars.
Financial Performance:
* EBIT margin expected in the lower half of 6%-7% forecast.
* BMW downgraded its margin outlook in September 2023 due to a recall affecting 1.5 million vehicles.
Market Trends:
* German carmakers facing weak demand in China, with consumers preferring domestic brands.
* Car prices and demand declined in Q4 2023 compared to the previous year.
* BMW experienced higher manufacturing costs in Q4 2023.
Impact on BMW:
* BMW shares dropped 2.8% in Frankfurt.
* Shares have declined 17% in the past year.
Operational Challenges:
* Recall related to a faulty braking system resulted in a €1 billion provision.
* Sales in China plummeted due to a temporary delivery halt.
Financial Services:
* BMW's financial services arm recognized additional provisions in Q4 2023 due to its Chinese finance business and UK consumer landscape.
Positive Outlook:
* Free cash flow in 2024 exceeded €4 billion, as per previous guidance.
* Electric vehicles have been a growth driver for BMW, despite the overall decline in car sales.
* BMW plans to introduce its Neue Klasse line of plug-in cars, with production commencing in late 2025.