Blowing hot and cold about BMW’s Q3 financial results

In the third quarter of 2023, BMW Group delivered 621 699 vehicles, 5,8% more than the year before. Turnover increased by 3,4% to €38,5 billion, but the net benefit decreased by 7,7%. The latter was a reason for some to talk about disappointing results, while shares nevertheless went up 3,5% last Friday.

Blowing hot and cold about German carmakers’ results is not a new phenomenon these last years, but analysts seem to diverge more and more. This is undoubtedly caused by a market that doesn’t know where it’s going (yet) and by a stock market that overreacts in different directions at particular moments.

Fueled by electric sales

For BMW Group, sales of new vehicles in Europe grew by 12,9%, while those in the US increased by 7,7%. However, sales in China (representing one-third of BMW’s global sales) decreased by 1,8%.

The most significant increase was in deliveries of battery-electric models (BEVs). Between July and September, the BMW Group sold 93 931 fully-electric vehicles (in 2022: 52 305 vehicles), an increase of 79,6%.

In the first nine months, BEV deliveries almost doubled, climbing 92,6% to 246 867 units(in 2022: 128 195 units). This sales growth is mainly derived from the BMW brand, with BEV deliveries up 119,3% during the same period.  That’s also comprehensible because Mini is changing its electric Mini Hatchback soon and will be adding an electric Countryman, which should increase BEV sales sharply next year.

“Our third quarter showed again that strong products generate strong demand across all drive technologies. This puts us on track to meet the higher targets we set in August,” said Oliver Zipse, Chairman of the Board of Management of BMW AG, on Friday.

In contrast to other German car companies, BMW is not complaining about its margins on electric cars. Currently, BEVs represent 15,1% of total BMW sales, attaining the target set for the end of the year.

Worries about China

The slight regress in Chinese sales (-1,8%) is sounding alarm bells, but doesn’t worry the managers in Munich too much yet. “From January to September, the BMW brand saw a slight increase in the market (+3,4%), thus exceeding the overall Chinese market development (+2,4%),” says the press release.

Total BMW Group deliveries in China rose to 603 920 vehicles (594 089 units/+1,7%) in the year to the end of September. The slightly reduced increase year on year was mainly due to the Mini model change,” it continued.

However, BMW Group is concerned about the growing competition of Chinese brands, also in the premium and higher luxury segments, while the attempts of the EU politicians to counter the subsidizing of the car industry by the authorities in China could have a boomerang effect on sales over there, especially the German car manufacturers fear.

Nevertheless, BMW doesn’t want to join the price war that has broken out in China recently. “It’s not in our interest to lower prices to gain market share,” commented Zipse. “We succeed in substantial growth with our acceptable price policy. Nevertheless, we are not immune to what happens in the market, and if needed, we will adapt our policy,” he added.

Zipse added that he wasn’t getting nervous about a possible continuing price war in China. “In my view, this concerns largely the middle-class segments and is not urgent in the luxury segments.”

Prudent but confident

With a profit margin coming close to 10,5% for the automotive branch within BMW Group, the group is also performing better than expected, and the top managers intend to proceed in that same direction.

“This positive trend will continue into the next year,” expects group CFO Walter Mertl. “We have a solid order book, and the demand for new 5 Series models gives us momentum and allows us to maintain our price settings.”

“We are steering our core business along a long-term, profitable growth path. To do this, we are making significant investments in our future. We are digitalizing and electrifying our products and bringing the entire company into a new era, Mertl continues.

“We are strengthening our innovation capabilities and creating value for our shareholders. The solid customer demand shows us we are on the right track,” he concludes.