BMW AG abandoned hopes for another record year in sales due to the coronavirus outbreak, predicting deliveries in 2020 will be “significantly below" last year’s levels and profitability at its weakest for years.
The maker of the 7 Series luxury sedan announced shorter shifts and flexible working for employees. It didn’t provide details on any plant closures that have been introduced by peers in the European auto industry.
“We take our responsibility seriously, both when it comes to ensuring the protection and health of our employees and to achieving the best possible balance in terms of profitability," Chief Executive Officer Oliver Zipse said in a statement on Wednesday.
German rivals Volkswagen AG and Mercedes-Benz maker Daimler AG already moved to idle European plants as the rapidly spreading virus sucks the air out of consumer demand and wreaks havoc on supply chains. The widening impact demonstrates the staggering effects the outbreak is having globally.
BMW shares dropped 4.4% as of 9:48 a.m. in Frankfurt.
Only a few weeks after being mostly confined to China and neighboring countries in Asia, Europe has become the epicenter of the crisis disrupting daily life across the continent.
BMW warned profit margins will recede for a third straight year in 2020 to between 2% and 4% as the pandemic adds to strains from spending on battery-powered cars. That compares with last year’s margin of 6.8%.
The commentary in the global car industry is changing daily as the epicenter of the Covid-19 outbreak shifted to Europe.
Car sales in Europe are off to their worst start to a year since 2013 and are poised to deteriorate further after automakers across the region shuttered plants to counter the coronavirus pandemic. Passenger registrations declined 7.2% in February after a similar drop in January, according to the European Automobile Manufacturers Association.
This story has been published from a wire agency feed without modifications to the text. Only the headline has been changed.