BMW earned more profit by selling less cars. Here is how
BMW AG reported better-than-expected earnings in the third quarter as higher prices for the carmaker’s top-end models helped offset flat deliveries.
Earnings before interest and tax soared 28% to €3.68 billion ($3.62 billion), BMW said Thursday, exceeding analyst estimates for a €3.52 billion result. The company reported better-than-expected revenue for the period and confirmed its full-year guidance, yet it also warned that inflation will weigh on orders.
“After nine months, we are on track to meet our targets for the year," Chief Executive Officer Oliver Zipse said in a statement. “The market success of our fully-electric models, in particular, means we can look forward to the coming months with confidence."
BMW and its peers are defying the increasing drag from macro-economic factors thanks to robust demand for their priciest models, with Stellantis NV on Thursday reporting a jump in revenue and Mercedes-Benz AG raising its outlook for the second consecutive quarter last month. Still, economic headwinds including surging energy costs are building. Volkswagen AG last week cut its sales projection for the year, citing scarce semiconductor availability and persisting logistics challenges.
Inflation Drag
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BMW said inflation and rising interest rates will weigh on buying in the coming months, adding that it expects its higher-than-average order books to normalize, especially in Europe.
The manufacturer doesn’t currently anticipate production disruptions due to energy shortages this year and sees a jump in vehicle deliveries in the current quarter from the three months through September.
Robust demand for fully electric models like the iX3 sport utility vehicle is expected to help bolster revenue. BMW sees EV sales jumping 70% next year after they more than doubled in the first nine months of this year.
Last month, the company said it’s investing $1.7 billion to expand its US plant in South Carolina to build six new EV models by the end of this decade for the local market.