The car manufacturer BMW suffered a massive drop in profits in the third quarter due to technical problems with its braking systems and weakness in the key Chinese market. The group’s net profit fell by almost 84 percent to 476 million euros, as the DAX group announced on Wednesday in Munich. Sales fell by almost 16 percent to 32.4 billion euros due to lower sales.
The costs for technical measures and the delivery stop as a result Problems with brakes supplied by Continental were a problem
on profitability in the core car manufacturing business. Because the once high-growth Chinese business was also sputtering, the profit margin before interest and taxes in the automobile division slipped by 7.5 percentage points to 2.3 percent. That was an even more significant decline than experts had already feared. BMW had problems because of that already lowered its outlook in September
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BMW boss Oliver Zipse (60) spoke of “extraordinary burdens in the third quarter”. Due to defects in the braking system, BMW was temporarily unable to deliver certain cars. For the fourth quarter, BMW was confident that it would be able to reduce inventories again and is sticking to the forecast for the full year that was reduced in September.
E-car sales increase by a tenth
BMW is experiencing robust demand for premium vehicles in many markets, it said. Nevertheless, the number of cars sold is likely to decline, and the profit margin in the car business is likely to be 6 to 7 percent, below the long-standing target of 8 to 10 percent. Despite the current weakness, BMW is sticking to its investment plans, said CFO Walter Mertl (50). Starting next year, the New Class electric vehicles, for which the Munich-based company has built its own factory in Debrecen, Hungary, will roll off the assembly line.
BMW expects the New Class to give additional boost to the electric car business. Despite the current market downturn, the company sold a good 10 percent more electric cars in the past quarter. Almost one in five BMWs now only has an electric motor.
However, overall deliveries fell, especially in China. Accordingly, operating profit in the third quarter fell by almost two thirds to almost 1.7 billion euros, and sales fell by 15.7 percent to 32.4 billion euros.