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China propels BMW to strong profits, Germany lags

Booming sales in China helped propel German luxury carmaker BMW to stronger profits in the first three months of the year even as its home market Germany trailed the ongoing recovery in global car markets from the worst of the pandemic shutdowns.

In this Wednesday, March 21, 2018 file photo, the logo of German car manufacturer BMW is pictured at the headquarters in Munich, Germany. German automaker BMW AG lost 212 million euros, $250 million, in the second quarter as the coronavirus pandemic shutdowns cut vehicle sales by a quarter in the April-June period. (Photo: AP/Matthias Schrader)

BMW said that its sales in China nearly doubled in the quarter to 230,120 vehicles, partly reflecting the shutdowns in early 2020 as China was hit first by the pandemic. Sales in the overall Asia region however exceeded even pre-pandemic levels.

Sales were up by double-digit percentages in most of Europe and in the US. An exception was the company’s home market in Germany, where sales dropped 5.0 per cent. The earnings underscored the German auto industry’s strong connections with China; competitor Volkswagen said Wednesday that it recorded a 61 per cent increase in first-quarter unit sales there, helping it sharply increase profits.

In this September 27, 2020 file photo, visitors gather near a BMW M8 model on display at the Auto China 2020 show in Beijing, China. (Photo: AP/Andy Wong)

The company said higher sales volume across key global markets as they rebound from the pandemic recession was accompanied by improved prices. Earnings were also supported by better used car prices in the US, which increases revenues from the sales of cars that have been leased to customers.

BMW CEO Oliver Zipse said that the quarter showed “our business model is a successful one, even in times of crisis.” He said the company’s focus is on developing digitally connected, electric cars. The company more than doubled its sales of battery and electric vehicles in the quarter over the year earlier, to 70,200.

BMW CEO Oliver Zipse (Photo courtesy BMW Group)

Zipse said that the fall in sales in Germany was less than that for the total market, meaning market share had increased, and said that sales in April, the first month of the new quarter, had been “significantly better.”

BMW’s net profit rose to €2.83 billion (US$3.42 billion) from €574 million in the year-earlier period. Revenues rose 15 per cent to €26.78 billion. Per-vehicle profitability, defined as operating result on sales, reached 9.8 per cent, a big increase from 1.3 per cent in the year-earlier quarter and within the company’s long-term target range.

Chief Financial Officer Nicolas Peter said that the company had not lost any production due to the shortage of semiconductors — the silicon chips that enable many of the electronic functions in today’s vehicles — that has affected the auto industry worldwide. He said, however, that the situation remains “tense” with regard to chip supply going forward.