BMW Withdraws Margin Scope for Car Unit

BMW Tuesday lowered the outlook for the profitability of its automotive and bikes units, citing worse-than-expected demand, which has been struck by steps to contain the coronavirus.

BMW Withdraws Margin Scope for Car Unit

BMW stated it expects the earnings before interest and taxes (EBIT) margin for the automotive section to drop within a range between 0% and 3% this year, modifying its scope from a previously anticipated margin range of between 2% and 4%.

Delivery volumes in these markets won’t rebound within a couple of weeks as BMW had assumed, with the best unfavorable impact now anticipated in the Q2 of 2020, the car manufacturer stated, cautioning that issues may still worsen.

Further margin stress may come from market distortions attributable to an even stronger competitive setting or from the second wave of infections and associated containment measures.

The Munich located group further mentioned it now expects deliveries of motorcycles to be down considerably from 2019 levels.

The EBIT margin in the bikes section will now be within a range of between 3% and 5%, rather than 6% and 8%, BMW mentioned.

In April, BMW warned it was anticipating a further slump in global demand even after a 20.6% plunge in Q1 sales to 477,111 autos.

BMW stated in March that its pre-tax revenue and vehicle deliveries would drop considerably this year as the coronavirus spreads and that this – combined with higher research and development spending – would decrease the profit margin in its automotive section.

BMW is due to post Q1 earnings on May 6.