BMW profits plummet - E-cars offer hope

BMW has suffered a massive profit slump due to brake problems and declining sales in China. The group's net profit in the third quarter fell by 84 percent to 476 million euros. The stock dropped significantly and was one of the biggest losers in the Dax index. CEO Oliver Zipse said: "In the fourth quarter, despite high planned investments, we are once again aiming for a stronger result in order to achieve our annual targets." The automaker had already revised these downward in September. 

Due to technical problems with brake parts from the supplier Continental, BMW must recall 1.2 million cars and cannot deliver 320,000 new cars. "That is why we have set aside a high three-digit million amount," said CFO Walter Mertl. For most new cars, the replacement of the parts will be completed by the end of the year. In the current fourth quarter, sales and profits are significantly better, said Mertl. 

In China, BMW sales fell by 30 percent to 148,000 cars. This means BMW now sells only a quarter of its cars there. However, at least half of the sales decline in China is due to the delivery stop because of the brakes, said Mertl. Nevertheless, BMW is also feeling subdued demand. Prices are under pressure and fluctuate strongly. This is likely to continue until the end of the year. BMW is now supporting its dealers with discounts and liquidity.

Growth Driver E-Car 

Battery electric vehicles (BEV) continue to be a growth driver for BMW - unlike other automakers. The group now offers 15 fully electric models, sells 17 percent of its cars as battery electric vehicles (BEV), and expects "a significant increase" again next year. In the new Hungarian plant in Debrecen, pre-series production of the first SUV car of the "New Class" with completely new electric drives and comprehensive digitization has begun, the assembly of the first sedan is being prepared at the main plant in Munich, the pre-series production of the e-motor housings of the "New Class" has started in the Landshut plant, and the plant for the batteries is being established in Lower Bavarian Irlbach-Straßkirchen.