Hit by falling sales in the Chinese market, this German automaker has downgraded its full-year performance targets for the second time since June.
With sales in China continuing to decline and quarterly profits shrinking sharply, BMW plans to further intensify its restructuring efforts and expects the market weakness to persist.
BMW has become the latest automaker to lower its full-year financial targets. It has now cut its guidance for the second time since June. Meanwhile, the global auto industry is grappling with sluggish demand in the world's largest car market.
From July to September, BMW's operating profit fell 30% year-on-year to 1.6 billion euros, slightly above the 1.5 billion euros analysts had expected. Revenue during the same period dropped 6% to 30 billion euros, mainly dragged down by a 25% year-on-year plunge in sales in the Chinese market.
BMW CEO Milan Nedeljković said on Wednesday: "The current state of the industry requires us to take decisive action and implement measures quickly. Therefore, we will purposefully step up structural adjustments and accelerate the pace of implementation."
After downgrading its performance expectations on Tuesday evening, BMW now expects its core business operating margin to come in between -0.5% and 0.5%, down from its previous forecast of 1% to 3%. In the third quarter, the operating margin of BMW's core automotive division stood at 3.4%.
BMW said it will speed up the reduction of management positions and phase out some older models ahead of schedule. In late September, BMW announced layoff plans aimed at cutting more than 100 management roles. In addition, the company plans to eliminate approximately 8,000 back-office administrative positions, equivalent to roughly 5% of its total workforce.
Unlike its larger rival Volkswagen, which plans to cut tens of thousands of jobs in Germany over the coming years, BMW currently has no plans to reduce assembly line workers in its home country. BMW has already invested 2 billion euros in Germany, directing funds to its Munich and Dingolfing plants as well as a new battery factory in Bavaria. At the same time, the company is launching production of the eighth-generation 3 Series, its best-selling model line.
So far this year, BMW's share price has fallen nearly 40%, performing slightly worse than Volkswagen, whose shares have dropped 35% over the same period.
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