BMW’s car production margin before interest and taxes was 2.3% in the third quarter, well below its 2024 target of at least 6%. This was the weakest result since the second quarter of 2020, when the coronavirus pandemic was crushing trade around the world.
Faulty BMW brakes
In September, BMW revised its profit forecasts for this year after a faulty braking system supplied by Continental AG forced the company to recall as many as 1.5 million vehicles for repairsw. The company allocated almost EUR 1 billion for this purpose. In addition, BMW had to temporarily suspend deliveries of hundreds of thousands of more expensive vehicles.
The BMW cooling system also needs to be repaired
Another blow to the German carmaker was detection of a fault in the cooling system. BMW announced that due to faulty coolant pump caps that could corrode, which could lead to a short circuit, which could even result in a car fire, in In China, 499,539 cars manufactured in China and 188,371 imported cars were recalled..
BMW sales in China are diving
Technical problems worsened an already difficult period for the luxury car maker as weakening demand in China and Europe resulted in falling sales that further reduced margins.
During the three-month period ending in September BMW sales in China, the company’s largest market, fell by 30 percent. The reason for such a large drop in sales of the luxury brand was lower demand from consumers who limited their spending on luxury goods. Moreover, local car manufacturers offered cheaper alternatives, leaving all European manufacturers, including BMW and Mercedes-Benz, far behind local competitors, including market leader BYD.
But it’s not just Chinese consumers who have turned away from BMW. The luxury brand’s sales declined in all regions in the third quarter of this year.
A tiny success
Against the background of this bad news, there is also one good news, which, however, will affect the overall result of the company. BMW has had little success in the electric car segment.
Deliveries of battery-powered BMWs such as the i4 sedan and iX1 SUV increased by 10%. compared to the previous year. In the case of Mercedes, wholesale deliveries of passenger electric cars fell by 31% during this period.
