BMW expects EVs, high-end models to offset weakening demand
2 min read . Updated: 15 Mar 2023, 05:40 PM IST
Premium- 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.
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.
“Our order books are very high still after high demand last year, which will will carry us through the next couple of months," BMW Chief Executive Officer Oliver Zipse said in an interview with Bloomberg Television. “We currently have one of the youngest product portfolios in the industry. That gives us a lot of pricing power."
Luxury-car makers like BMW 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. Shares rose about 1.7% in early trading.
Higher costs for materials and logistics will continue to weigh on profits this year, Chief Financial Officer Nicolas Peter said. BMW faced an additional €2.5 billion ($2.7 billion) headwind last year from the surge in prices.
EV Growth
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 50% of total sales well ahead of 2030.
BMW expects sales growth in the “mid-double digits" percentage range for its 7-Series and Rolls-Royce models.
Zipse confirmed that BMW is investing in its Oxford plant, where it makes Mini models. The move is a bright spot for the UK after auto production slumped to a 66-year low last year.
UK Mini Plant
“We are investing in Oxford and we are getting support from the government on our EV push," Zipse said. “We will continue to look at the UK as a place for investment because, especially Mini and Rolls-Royce, these are English brands."
BMW said last week its 2022 earnings before interest and tax rose to €3.5 billion in the fourth quarter, with its margin on carmaking reaching 8.6%, at the higher end of its guidance.
This story has been published from a wire agency feed without modifications to the text.
