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German luxury automaker BMW saw its profit ability drop amid higher launch costs for new vehicles and a tougher market in China， a major pillar of its profits.
BMW was hit sharply by the economic slowdown in China.
German luxury automaker BMW saw its profit ability drop amid higher launch costs for new vehicles and a tougher market in China， a major pillar of its profits.
The company said that its net profit fell to 1.75 billion euros （US$1.92 billion） from 1.77 billion euros in the April-June quarter of last year.
The company also said it sold a less profitable product mix containing more compact cars， which typically earn less per vehicle.
Slowing sales in China may force German luxury automaker Bayerische Motoren Werke AG to revise this year’s profitability goals. It is a big challenge for BMW’s new Chief Executive Officer Harald Krueger as he seeks to defend his lead in the global luxury car industry.
According to BMW’s Chief Financial Officer Friedrich Eichiner， the company has cut production by 16，000 cars in its biggest market—China. And after a stock market rout discouraged customers from making large purchases， those still buying are demanding bigger price cuts.
Automakers’ sales in China may drop in 2015 for the first time since 1998.
“BMW was hit sharply by the economic slowdown in China，” Michael Raab， a Frankfurt-based analyst at Kepler Cheuvreux， said in an interview.“BMW missed market expectations on most of its key metrics.”
The second-quarter margin on car making fell short of analysts’ expecta- tions due to a combination of the aging 7-Series sedan， due to be refreshed this year， and slowing growth in China， Raab said.
The company’s second-quarter margin on car making narrowed to 8.4%， the lowest level since 2009， compared with 11.7 percent last year.
BMW’s margin trailed MercedesBenz AG and Audi AG， which reported respective turns on sales of 10.5 percent and 9.8 percent.
The planned new 7-Series is part of BMW’s drive to update its model line. Luxury-car manufacturing competitors such as Daimler AG are winning buyers with new products such as the latest generation of the Mercedes C-Class mid-size sedan.
The Chinese car market is slowing faster than BMW expected.
Stuart Pearson， a London-based analyst with Exane BNP Paribas said，“We’re still under pressure in China. It’s not just a BMW issue， but it’s still going to be a wakeup call.” The Chinese car market is slowing faster than BMW expected.
In July， industrywide auto sales in China fell 3.2%， the first decline in more than two years.
And in recent years， the country’s car market has been the main growth driver for luxury-car makers.
Audi and BMW both reported sales declines for June in China， while demand at Mercedes jumped 39 percent， albeit from a much lower base.
BMW’s second-quarter group earnings before interest and tax fell 3% from a year earlier to 2.53 billion euros（US$2.77 billion）. Profit matched the 2.54 billion-euro average of 10 analyst estimates compiled by Bloomberg. Revenue jumped 20% to 23.9 billion euros.
The company also noted that the Chinese market — a source of rich profits for German automakers in the past several years — is “normalizing”and becoming more competitive.
BMW sales there dropped 1.4% in the quarter. Chinese economic growth has slowed in recent months.
BMW is battling to maintain its lead in global luxury car sales.
In addition to the economic slowdown， BMW is contending with potential new competitors， such as technology companies Apple Inc and Google Inc， that are studying whether to enter the auto industry.
BMW is battling to maintain its lead in global luxury car sales， which it has held since overtaking Mercedes in 2005.
Spending requirements for new technology such as self-driving cars and vehicles with electric engines like the i8 sports car are pushing the car manufacturer and its rivals into cost-saving initiatives to maintain profitability levels.
Analysts say key BMW models such as the 5 Series and 7 Series sedans are nearing the end of their life cycle， which can hurt sales as customers see newer products from competitors. The company has already unveiled a new 7 Series， which will go on sale this fall.
Renewing models is costly but pays off if the new version sells better than its competitors.
BMW was hit sharply by the economic slowdown in China.
German luxury automaker BMW saw its profit ability drop amid higher launch costs for new vehicles and a tougher market in China， a major pillar of its profits.
The company said that its net profit fell to 1.75 billion euros （US$1.92 billion） from 1.77 billion euros in the April-June quarter of last year.
The company also said it sold a less profitable product mix containing more compact cars， which typically earn less per vehicle.
Slowing sales in China may force German luxury automaker Bayerische Motoren Werke AG to revise this year’s profitability goals. It is a big challenge for BMW’s new Chief Executive Officer Harald Krueger as he seeks to defend his lead in the global luxury car industry.
According to BMW’s Chief Financial Officer Friedrich Eichiner， the company has cut production by 16，000 cars in its biggest market—China. And after a stock market rout discouraged customers from making large purchases， those still buying are demanding bigger price cuts.
Automakers’ sales in China may drop in 2015 for the first time since 1998.
“BMW was hit sharply by the economic slowdown in China，” Michael Raab， a Frankfurt-based analyst at Kepler Cheuvreux， said in an interview.“BMW missed market expectations on most of its key metrics.”
The second-quarter margin on car making fell short of analysts’ expecta- tions due to a combination of the aging 7-Series sedan， due to be refreshed this year， and slowing growth in China， Raab said.
The company’s second-quarter margin on car making narrowed to 8.4%， the lowest level since 2009， compared with 11.7 percent last year.
BMW’s margin trailed MercedesBenz AG and Audi AG， which reported respective turns on sales of 10.5 percent and 9.8 percent.
The planned new 7-Series is part of BMW’s drive to update its model line. Luxury-car manufacturing competitors such as Daimler AG are winning buyers with new products such as the latest generation of the Mercedes C-Class mid-size sedan.
The Chinese car market is slowing faster than BMW expected.
Stuart Pearson， a London-based analyst with Exane BNP Paribas said，“We’re still under pressure in China. It’s not just a BMW issue， but it’s still going to be a wakeup call.” The Chinese car market is slowing faster than BMW expected.
In July， industrywide auto sales in China fell 3.2%， the first decline in more than two years.
And in recent years， the country’s car market has been the main growth driver for luxury-car makers.
Audi and BMW both reported sales declines for June in China， while demand at Mercedes jumped 39 percent， albeit from a much lower base.
BMW’s second-quarter group earnings before interest and tax fell 3% from a year earlier to 2.53 billion euros（US$2.77 billion）. Profit matched the 2.54 billion-euro average of 10 analyst estimates compiled by Bloomberg. Revenue jumped 20% to 23.9 billion euros.
The company also noted that the Chinese market — a source of rich profits for German automakers in the past several years — is “normalizing”and becoming more competitive.
BMW sales there dropped 1.4% in the quarter. Chinese economic growth has slowed in recent months.
BMW is battling to maintain its lead in global luxury car sales.
In addition to the economic slowdown， BMW is contending with potential new competitors， such as technology companies Apple Inc and Google Inc， that are studying whether to enter the auto industry.
BMW is battling to maintain its lead in global luxury car sales， which it has held since overtaking Mercedes in 2005.
Spending requirements for new technology such as self-driving cars and vehicles with electric engines like the i8 sports car are pushing the car manufacturer and its rivals into cost-saving initiatives to maintain profitability levels.
Analysts say key BMW models such as the 5 Series and 7 Series sedans are nearing the end of their life cycle， which can hurt sales as customers see newer products from competitors. The company has already unveiled a new 7 Series， which will go on sale this fall.
Renewing models is costly but pays off if the new version sells better than its competitors.