BMW joins other carmakers with warning of coronavirus profit slump
BMW AG lowered its automotive profit outlook for the year as the German carmaker said the fallout from the coronavirus pandemic, which continues to disrupt production and sales in markets from Europe to North America, is lasting longer than expected.
BMW now sees an Ebit margin for its automotive segment of between 0% and 3%, from 2% to 4% earlier, the company said in a statement late Tuesday.
Car sales won’t return to normal in the coming weeks and the second quarter will be worse than the first three months of the year, BMW said. Both Fiat Chrysler Automobiles NV and Volkswagen AG expect to lose money in the period from April through June.
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The new outlook is a sign that BMW is bracing for tough times after carmakers from Ford Motor Co. to Daimler AG forecast falling profit in the past days because of the pandemic. BMW is the last European carmaker to report first-quarter earnings, which it will release in greater detail on Wednesday.
BMW still expects group profit before tax to be “significantly lower" than in 2019, after Chancellor Angela Merkel this week dashed the company’s hopes for immediate auto purchasing subsidies, with the German government deferring a decision until June.
The crisis is hitting BMW and its peers at a sensitive time -- manufacturers are ramping up spending on electric vehicles to meet tougher emissions regulations and need profits from conventional cars to fund those investments.
BMW said its new guidance doesn’t reflect a longer recession in major markets, a more severe slowdown in China, tougher competition because of the virus and “possible implications caused by a second wave of infections and associated containment measures."