Carmaker BMW significantly increases profits – and outperforms mercedes in terms of unit sales
the munich group pulls ahead of the competition.
Munich more luxury cars, fewer discounts: BMW presents a strong third-quarter balance sheet. The bavarian dax group achieved a "new high" in sales and profits from july to september despite shrinking vehicle sales. In concrete terms, the munich-based company increased its revenues by 4.5 percent compared to the previous year – to 27.5 billion euros. Earnings before interest and taxes shot up from 1.9 to 2.9 billion euros. An increase of almost 50 percent.
At the end of the day, BMW generated a net profit of almost 2.6 billion euros. This corresponds to a year-on-year increase of around 42 percent compared to the third quarter of 2020. "the BMW group shows how profitability and transformation go hand in hand. For us, technological change is a great opportunity to strengthen our business model in the long term," said BMW boss Oliver Zipse.
The manager wants to make BMW "future proof. To achieve this, the share of all-electric models in total sales is expected to climb from around three percent at present to over 50 percent by the end of the decade. In addition, zipse wants to reduce the CO2 footprint of its vehicles by 40 percent by 2030 compared to 2019 levels, for example by drastically increasing the recycling quota. According to Zipse, sustainability ultimately goes far beyond the switch to electric drives.
At present, however, his group still earns most of its money from diesel and gasoline engines. After nine months of business, BMW has almost quintupled its net profit to 10.2 billion euros, thanks mainly to its internal combustion engines. The return on sales in the dominant car division is thus a proud 11.3 percent. Even better, the segment’s free cash flow amounted to 6.3 billion euros. Nothing stands in the way of paying an adequate dividend to shareholders.
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At the heart of BMW’s good results are a "better product mix" and "good price penetration," the group said. In concrete terms, this means that BMW, like Daimler and other car companies, has recently channeled all available chips into the production of its particularly lucrative suvs, heavy sedans and sports cars.
BMW gets off lightly
Sales of the luxury brand rolls-royce, for example, rose disproportionately by 63 percent to 4300 units. Sales by the tuning subsidiary BMW M gmbh also increased in September to 123.000 units by well over one fifth. Although sales in other segments are declining. But because new cars are in short supply, carmakers can push through higher prices, explains nordlb analyst frank schwope: "artificial scarcity strengthens prices."
Of the three major domestic automotive groups, BMW has so far coped best with the semiconductor crisis. In the third quarter, the munich-based company suffered only a twelve percent drop in new car sales, while sales at arch-rival mercedes-benz slumped by almost a third and those of volkswagen by a quarter.
After nine months of business, BMW records sales growth of almost 18 percent, with more than 1.93 million units sold. By way of comparison, mercedes sales recently stagnated at 1.6 million vehicles sold. This means that in 2021, for the first time in years, the Swabians are likely to deliver fewer cars than their Bavarian competitor. In other words, BMW is on the verge of replacing Mercedes as the world’s largest premium manufacturer.
In terms of profitability, however, the brand with the star is currently still slightly ahead. after three quarters, daimler’s car division posts a margin of 11.8 percent – half a percentage point higher than BMW’s. Historically, however, both premium manufacturers are currently shining with unprecedented earnings strength.
BMW confirmed its annual targets, according to which the car margin should be up to 10.5 percent after twelve months. "we are on target for our annual forecast and are looking ahead with confidence," said chief financial officer nicolas peter. However, the manager expects the shortage of microchips to continue in 2022. But the worst seems to be over.
Expert: tesla will overtake BMW
Experts warn that BMW is more likely to face risks in the medium term anyway. "the market for battery electric cars is developing much faster than some on the BMW board could have imagined. People have been relying on plug-ins and hybrid platforms for too long and have pushed back the superior skateboard architectures," criticizes ferdinand dudenhoffer. The head of the Center Automotive Research (CAR) believes that the American electric car pioneer Tesla will overtake the Munich-based company in terms of sales figures before 2030.
For the year 2022 alone, Tesla has standard battery capacities for more than 1.5 million units, said dudenhoffer. In addition, tesla is currently discussing an order for iron phosphate cells from the Chinese supplier CATL for a good 800 units.000 vehicles spoken. And then tesla production will also start soon in grunheide near berlin. "time is running out for BMW," believes dudenhoffer.
The industry expert is convinced that BMW, like mercedes, would have to switch to a purely electric fleet much faster in order to be able to stand up to attackers like tesla, lucid or nio in the future. BMW boss Zipse, on the other hand, does not think it would be a good idea to abandon the combustion engine prematurely. The hope that soon everyone in germany and elsewhere will only drive electric cars will "not be fulfilled," the manager explained only recently in an interview with the "spiegel" magazine. The reason: "The charging infrastructure is not being expanded at the same speed as the product range for e-cars."
In order to keep up with the ramp-up of electric vehicles, the expansion of charging stations in germany alone would have to be five times faster than it is now. Zipse, however, obviously does not believe that such an acceleration will occur.
And in many other EU countries, there is not yet anything even close to a charging network suitable for everyday use. "why should we commit ourselves prematurely to just one technical solution if this leaves considerable potential untapped in the here and now?" asks zipse.
It will be a very long time before all car drivers in all countries drive only electrically, says the BMW boss, and nothing will be gained in terms of climate protection if electric cars are run on coal-fired power. "we need competition between technologies – in the interest of customers and for less CO2," zipse emphasizes: "anything else would be a consolidation course."