In the second quarter of 2022, BMW saw its earnings decrease, like so many competitors. Thanks to increased sales of EVs, BMW sees itself better prepared for the challenging future /BMW
In the second quarter of 2024, BMW Group saw its earnings drop a bit due to a weak Chinese market and the investment costs for the ‘Neue Klasse’. On the other hand, the Munich-based carmaker was successful in selling more EVs.
BMW is not the only one struggling with a demand slowdown in China. The list of car manufacturers in the same situation is growing every day
BMW Group’s net income fell 9 percent to €2.7 billion in the second quarter, according to BMW. The automaking EBIT margin was 8.4 percent, compared to 9.2 percent in the same period last year. This is at the lower end of the 8 to 10% range BMW is targeting for the full year. BMW still confirmed its guidance for the full year.
Problem China
Heightened competition and weaker demand in China weighed on revenues, BMW said. The company’s vehicle deliveries in the world’s biggest auto market declined 4.7% in Q2, with a real estate crisis weighing on consumer spending.
The slowdown in China is affecting demand for a wide range of premium items, including cars, watches, and designer clothing. BMW is increasing prices across its lineup and reducing sales targets for dealers in the country to escape a bruising price war. The automaker said it expects the economic situation there to stabilize starting in the current quarter.
BMW also cited higher manufacturing costs and personnel spending, as well as the cost of IT projects and investments for the ‘Neue Klasse,’ to explain the lower benefit.
Success with EVs
In contrast to rival premium manufacturers like
Mercedes and Audi, BMW was increasingly successful selling EVs. In a very challenging market, BMW saw its deliveries of BEVs grow by 22%, also thanks to successful models like the i4 and the iX1 and the launch of the new i5.
BMW cited its attractive product portfolio for this rise in an EV market where an increasing number of manufacturers are revising their EV sales targets. BMW wants this success to continue and is, therefore, betting on renewed momentum when it introduces its ‘New Class’ BEVs, with sales projected to begin in late 2025.
Increased investments
In the first half, the company’s research and development spending, including on the Neue Klasse platform, jumped by over a fifth to €4.2 billion.
With the ‘Neue Klasse, ‘ BMW aims to slash battery costs in half from current levels and increase driving ranges by around 30%. The vehicles will allow for bi-directional charging, which enables buyers to use them as a backup battery at home.
“The new EVs will raise BMW to a completely new technological level,” CEO Oliver Zipse said in an accompanying statement. “Our ambition has always been: BMW sets itself apart from the competition, especially in the face of headwinds.”
“The first six months confirm this: under the challenging conditions in the first half of the year, we are leading within our direct competitive environment with our electric growth – and at the same time, we have delivered profitability within the full-year target corridor for ten consecutive quarters,” Zipse continued.
“With this high degree of resilience, we can consistently invest in our future when the entire industry has to navigate through rough waters. In this way, we remain clearly on course for our largest future project, the ‘Neue Klasse’, with which we will raise BMW to a completely new technological level as of next year.”
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