BMW jumps to profit on the back of strong electric vehicle sales, higher prices
German automaker BMW has beaten analysts' forecasts with a 42.4% year-on-year increment in third quarter net profit to 2.58 billion euros ($2.99 billion) on the back of higher vehicle prices and strong electric vehicle sales. The profit jump happened despite a fall in vehicle deliveries.
Earlier this year, BMW had said that it expected to deliver up to 90,000 fewer cars in 2021 due to the ongoing global shortage of semiconductor chips. Its deliveries fell 12.2% in the third quarter but its revenues were boosted by 4.5%. The company reported an operating profit (EBIT) margin in its automotive division of 7.8%.
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BMW's electric vehicles saw a significant boost with sales in the first nine months of the year almost double of last year's levels of just under 232,000 vehicles. Further, the company prioritized its high-priced models such as the X7 SUV worth $75,000, which helped the company offset less output woes due to a scarcity of semiconductor chips. "A better product mix and good price setting of new vehicles alongside a stable pricing trend of used vehicles strengthened the financial performance of the business," the company said in a statement.
BMW has navigated the impediments of the chip shortage better than its peers such as Volkswagen, Stellantis or Renault, who reported a dampened third quarter sales due to scarcity of chips. In August, BMW had warned that supply chain bottlenecks would hit the second half of the year, after it garnered net profits of 4.8 billion euros in the second quarter in a post-lockdown rebound.
BMW managed to maintain a full-year EBIT margin forecast of 9.5% to 10.5% for its automotive division. "We are on track for our full-year forecast and are looking forward," the company's CFO Nicolas Peter said.
(with inputs from agencies)