The iconic German car maker is the latest car manufacturer to be hit by falling sales, including in China, where sales were down by almost 30%.
A recent global recall involving more than 1.5m vehicles and plummeting sales in China have weighed heavily on the iconic German car maker’s quarterly performance.
BMW AG (including the Mini and Rolls-Royce brands) reported pre-tax profits of €838m for the three months to 30 September, almost 80% less than the same period last year. The group’s revenue came in at more than 15% lower than the previous year and return on sales shrank to 2.6% from 10.6%.
The stuttering figures are partly explained by BMW’s recent recall of 1.5m vehicles due to a faulty integrated braking system (IBS) supplied by Continental AG.
Consequently, delivery volumes dropped and warranty costs had a “notable impact on earnings”, according to BMW’s financial report.
Deliveries in the automotive segment were down 13% globally, mainly driven by an almost 30% drop in deliveries to the Chinese market.
“The challenging market environment in China is also having an effect. Despite the stimulus measures implemented by the Chinese government, the general economy remains affected by low consumer confidence, which is having a knock-on effect on sales volumes,” read the statement.
EVs and the European market may drive growth in the future
On the upside, the battery electric vehicles proved to be the driver of growth, as BMW saw a significant increase of 19.1% in BEV sales after the first nine months of 2024.
Over the next months, the car maker expects lower commodity prices, particularly for battery materials and precious metals, which could further strengthen this segment.
While the new US President-Elect Donald trump has hinted trade tariffs that could largely impact carmakers, and the Chinese market is lagging, there is some relief in that overall, the group’s vehicle sales in European markets are promising.
Even though there was not a single market that has seen increasing vehicle delivery, the European market dropped by just 1% over the three months to 30 September and grew by 1.4% over the January-September period.
For the rest of 2024, BMW expects further significant decrease in group profit before tax due to low levels of deliveries and no significant change in the Chinese market.
“The delivery stops related to the supplied Integrated Brake System (IBS) and a sustained drop in consumer confidence in China will continue to have an impact for the rest of the reporting year. The BMW Group expects to see a slight decline in deliveries as a result.”
