Top models drive profitability at heavily investing BMW

At its annual investor conference, BMW Group revealed a robust financial result for the past year and sketched a positive operational outlook for 2024. This year, the carmaker will spend a peak budget on new energy R&D before its next-generation electric vehicles hit the factory floor.

CEO of BMW, Oliver Zipse, looks back at a solid performance continuation for 2023. A stronger-than-expected interest in its high-margin models – Zipse named the iX, X7, and new 7 Series – has led to an operating margin of 9.8%. Together with Mini and Rolls-Royce, the group delivered 2.5 million vehicles, the highest ever, or an increase of 6.4% compared to 2022. It forecasts more or less to level that output for the upcoming fiscal year.

Bigger EV share

The BMW Group also comfortably avoided EU fines, as its fleet reached an average of 102.1 g/km CO2, more than 20% below the bestowed target. Its compatriot Volkswagen appealed to the EU last week to soften the regulations, citing a much higher-than-expected fine weighing in on the results.

Growth for electric vehicles isn’t sputtering for the Bavarian automaker, as these represented 15% of total sales last year, or 375,000 units, “jumping at 74%”, Zipse added, compared to the year before. While BMW accounts for 3.3% of the global automotive market, it secures 4.2% in the EV segment. For comparison reasons, leader Tesla takes 19% of that marketplace.

Zipse also pointed to the strong performance of plug-in hybrid vehicles, fueling his strategy of a multitech approach to decarbonization. The same results pattern emerged in the two-wheeler department, where record deliveries (202,895 units) were posted due to growing demand in Europe and China.

Peak expenditure

Still, dividends will be cut as consolidating its Chinese joint venture, BMW Brilliance Automotive (BBA), dented the company’s bottom line. Also, income from off-lease contracts dove over the cooling and is further expected to dwindle the used car market.

The forecasted stable financial outlook for the upcoming year showcases BMW’s resilience. “We are investing in the future of our company like never before,” explained finance chief Walter Mertl in a statement. He clarified that expenses in electrification, software, and new models will peak this year, with an extra cost of 600 million euros. In 2025, the inaugural year of the firm’s most significant investment ever, the model series Neue Klasse, budget spending in R&D will start to soften.

Zipse also reiterated the company’s 50% electric sales goals, a fully battery-powered line-up for Rolls-Royce and Mini, and a hydrogen model by the decade’s end.