BMW does well in Q3, but stays prudent
Even though the third quarter’s financial results are good, BMW Group keeps its less rosy forecast for the whole year. It fears that the second wave of the pandemic will negatively impact the last quarter and in 2021. Meanwhile, the Group accelerates, even more, its electrification.
“The new (partial) lockdown can have a severe impact on our operations in Q4 and the beginning of 2021,” warns BMW Group CEO Oliver Zipse. The third-quarter figures are positive because of a healthy Asian market, but BMW wants to stay very prudent with its prognoses.
For the whole year 2020, BMW expects a “significant regress” of its benefit before taxes and its car sales. The net benefit for Q3 is €1,8 billion, 17% higher than in 2019. But the exploitation benefit (EBIT) is 16% lower at €1,9 billion, while total turnover is 1 lower at €26,3 billion.
In the second quarter of the year, the Group has registered its first loss in ten years, due, of course, to the closing of the factories and the dealerships for months during that period. For the first nine months in total, the net benefit falls by 40% to €2,2 billion.
One of the remedies to counter the regress in revenues is, of course, cost-saving. BMW will reduce its total number of personnel (126 000 people at the end of 2019) by 6 000 persons. They hope to do it in a ‘natural way’, not by firing people but by not replacing people leaving (pensioned, changing jobs, end of contracts, etc.).
Concerning the EU emission targets set for the end of the year, BMW is confident that it can respect the limits and avoid huge fines. Nevertheless, it wants to expand its electrification program rapidly. Already in the past nine months, the group sold 20% more electrified vehicles.
Within ten years, BMW wants to have sold already 6 million electrified cars, two-thirds of it pure electric, one-third hybrid. At the moment, BMW has already sold 600 000 cars of the kind.
Until now, BMW was more inclined to use a multi-purpose platform for all forms of propulsion. Now we see that they are turning toward a really dedicated platform for electric vehicles. The new platform will be used in the new plant in Hungary after 2025. The company intends to start building a fully electric model in Regensburg from 2022.
This change in strategy will occur gradually. For the period up to 2025, Oliver Zipse sees advantages in the flexible production strategy on one platform, in defense of the course followed so far. “The BMW Group is in exactly the right and robust position for the current phase of our transformation up to 2025: our share of e-mobility is growing with maximum flexibility in production,” he stated in the German magazine Automobilwoche.
Meanwhile, a separate department has been set up since July to develop the new EV platform. As we mentioned, as part of BMW’s electrification strategy, the production of a purely electric model will now be added in Regensburg. Still, BMW did not specify which model this will be.