BMW reported a lower-than-anticipated profit margin in its core automotive division for the second quarter of 2024, attributing the decline to intensified competition and reduced demand in China.
The German luxury carmaker’s earnings before interest and tax (EBIT) margin for its automotive segment decreased to 8.4%, down from 9.2% in the same quarter last year, falling short of analysts’ expectations of 8.7%, according to internal company estimates.
The company also highlighted its record level of investment, particularly in model updates and electric vehicle development, which is projected to peak this year.
BMW maintained its 2024 guidance, projecting a slight decline in pre-tax earnings due to elevated costs associated with research and development, manufacturing, and personnel.
The automotive segment’s margin for Q2 fell to the lower end of BMW’s annual target range of 8-10%.
In the competitive Chinese market, BMW faced a 4% drop in sales during the first half of 2024. Despite the challenges, the company outperformed rivals Volkswagen and Mercedes in the region. BMW anticipates a stabilization of the economic situation in China in the third quarter, as stated in their report.
