BMW sees potential risk from more lockdowns in China next year

BMW AG sees further Covid-related lockdowns in China as a risk for next year, despite healthy demand there for the carmaker’s fully-electric models and expectations of stable global sales.

By: Bloomberg
| Updated on: 28 Nov 2022, 14:24 PM
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Next year’s global sales for BMW should be at the same level as this year, said CEO Oliver Zipse.
Next year’s global sales for BMW should be at the same level as this year, said CEO Oliver Zipse.

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“In China, lockdowns are currently increasing, not decreasing," Chief Executive Officer Oliver Zipse said to reporters at an event on Friday. “I am worried about how we get out of the lockdown situation in future quarters. There is no visibility that China has a solution."

Demand for BMW’s fully-electric models in China is still strong, Zipse said, and next year’s introduction of battery-only Mini models and the i5 should also help boost sales.

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Western vehicle manufacturers are seeing tougher competition from local competitors in China, the world’s largest car market. Tesla Inc. is changing its marketing strategy there due to uneven demand, and is now offering insurance subsidies after recent price cuts. Mercedes slashed the price for its flagship EQS electric sedan by as much as $33,000 in a move to reposition in a competitive market.

Next year’s global sales for BMW should be at the same level as this year, Zipse indicated. “I would give a stable outlook," he said when asked for a guidance. “There will be different developments in different parts of the world, but overall, they will compensate each other."

For this year, BMW forecasts deliveries to be slightly below last year’s 2.5 million vehicles. It lowered the deliveries outlook in August, after previously predicting that sales would remain flat compared to 2021 despite growing supply-chain woes. At the beginning of November, the company said it sees demand normalizing from pent-up levels, especially in Europe.

Although BMW navigated the semiconductor shortage better than its competitors at the beginning of the year, the company’s production chief Milan Nedeljkovic said in October that supply-chain issues including the chip crunch are responsible for slightly declining deliveries.

While the German carmaker said recently that it sees itself moving past this chip-related disruption, its competitors are more cautious. Jaguar Land Rover is reducing vehicle output in the UK through March on semiconductor shortages, and Volkswagen cut its sales projection for this year on supply chain constraints.

First Published Date: 28 Nov 2022, 14:24 PM IST
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