BMW’s Higher Margin SUV Sales Help Drive 33% Profit Rise In Germany

BMW’s third-quarter operating profit rose 33 per cent on stronger sales of sports utility vehicles as well as the absence of one-off factors which had depressed earnings a year earlier, the German luxury carmaker said on Wednesday. The Munich-based company said its earnings before interest and taxes (EBIT) rose to 2.29 billion euros ($2.54 billion), up from 1.72 billion euros in the year-earlier quarter and ahead of the 2.16 billion euros forecast in a Refinitiv poll. The operating margin at its automotive division rose to 6.6% from 4.4% in the year-earlier period, when new emissions rules led to heavy stockpiling and discounting by competitors and hit BMW’s profit margin on luxury cars.

Sales of BMW’s cars rose just 3.6% in the quarter, but shifted from sedans to sports utility vehicles, including its higher-margin X3 and X4 models, it said.

BMW reiterated it expects a significant fall in group pretax profit, a slight increase in vehicle deliveries, and an EBIT margin of between 4.5% and 6.5% in the automotive division as it prepares to roll out electric cars.

It sees demand for electrified vehicles, which includes hybrid engines, doubling by 2021, and sees sales of electrified cars growing by 30% annually between 2021 and 2025.

The carmaker faces higher manufacturing costs as it prepares factories to build hybrid and electric cars, forcing it to cut costs elsewhere, with the aim of achieving more than 12 billion euros in efficiency gains by the end of 2022.

BMW said it will cut development times of vehicles by a third, and reduce the number of drivetrains by 50% from 2021 onwards.

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