Despite ongoing shortfalls related to the supply of semiconductor chips and rising material prices, BMW was able to grow its profitability during the third quarter with a 42.4% increase to $2,990,000,000. The German automaker beat analyst forecasts by a healthy margin, and the success has been attributed to the manufacturer’s ability to raise prices in an effort to offset the cost of inputs and delivery shortfalls, along with strong supply chain insight, something that has long played a role in the prowess of BMW’s global decentralized production network.
Dr. Nicolas Peter, the BMW Group board member responsible for overseeing finance, relayed that the company was on track for its full-year forecasts, and express confidence in the automaker’s ability to exceed its target of 10% earnings before interest and tax.
“We have always had good oversight over our supply chain. That is paying off now—right down to the raw materials,” explained Oliver Zipse, BMW Group CEO.
BMW, along with perennial rival Daimler, were the only German automakers able to raise prices to offset losses, something Volkswagen did not have the option of doing. The move was reflected in the EBIT margins of BMW and Daimler, which came in at 7.8% for both luxury brands, compared with Volkswagen at 4.9%. More evidence can be found in BMW’s revenues growing 4.5%, even as global deliveries decreased 12.2% during the third quarter.
Dr. Nicolas Peter previously stated earlier in the year that BMW expected to deliver 90,000 fewer cars during 2021 due to the ongoing semiconductor computer chip shortage, which is forecasted to persist into 2022. During July of this year, we reported on BMW being unable to complete 10,000 vehicles due to the input shortfall. The latest from Peter signifies that BMW could have sold tens of thousands more cars that it was simply unable to produced.
With the first month of the fourth quarter already over, BMW has maintained its full-year EBIT margin forecast for between 9.5% to 10.5%, but added that this would be realized through a slight reduction in the workforce.—Alex Tock
[Photos courtesy BMW AG.]