BMW says EVs, high-end models to offset weakening demand

By BLOOMBERG | 15 March 2023


HAMBURG: BMW AG expects 2023 profit margins around last year’s level as sales of its most expensive vehicles like the 7 Series offset weaker pricing for entry-level luxury models.

Automaking returns are expected to stay between 8% and 10% this year, in line with long term targets, the Munich-based carmaker said Wednesday. BMW said deliveries will likely increase slightly after dropping 4.8% last year due to supply chain disruptions.

BMW and other luxury-car makers have withstood economic headwinds as demand for the most expensive vehicles remained robust. But with high energy prices continuing to stoke inflation, higher interest rates and faltering consumer confidence, German auto manufacturers are growing pessimistic, a recent survey showed.

BMW also expects global markets to cool this year. While the company forecasts demand to remain stable, it indicated that prices for new and used cars will settle after increases in 2022.

Still, BMW expects growth in the “mid-double digits” percentage range for its 7-Series and Rolls-Royce models.

After doubling sales of battery-only powered BMW and Mini brand cars last year, BMW said sales of pure-electric vehicles will likely account for 15% of total deliveries this year, up from 9%. The company now expects fully electric models to account for at least 20% of total sales by 2024 and 50% “well ahead of 2030.”

BMW said last week its 2022 earnings before interest and tax rose to €3.5 billion (RM16.8bil) in the fourth quarter, with its margin on carmaking reaching 8.6%, at the higher end of its guidance.

Keywords