BMW sales boosted by China’s strong Covid-19 recovery
German luxury car maker warns of pandemic-related uncertainties in coming months.
BMW AG, the German luxury car maker, reported strong growth in profits and new vehicle sales in the third quarter, as China’s robust recovery from the pandemic continues to bolster premium auto brands.
China was the first major economy to lock down this year in a bid to contain the spread of the coronavirus. The strict lockdown helped China contain new infections, and when Europe and the U.S. shut down their economies in the spring and early summer, China’s economy was already beginning to rebound.
The recovery in demand for foreign automobiles in the world’s biggest car market by sales has thrown the German auto industry, which achieve a large share of its annual sales in China, a lifeline as new sales in Europe and the U.S. remain weak or in decline.
The sale of BMW-branded vehicles rose 9.8% in the third quarter, driven by a 31% surge in sales in China, which helped dull the effect of a 16% drop in U.S. sales.
In the nine months to Sept. 30, BMW’s overall new vehicle sales fell 12.5% to 1.64 million vehicles, pulled down by a 25% drop in U.S. sales and a 20% decline in Europe.
In China, sales of new BMW, Rolls-Royce, and Mini brands rose 6.4% to 560,367 vehicles, a record for the Munich-based auto maker.
The resurgence of demand in China drove BMW’s profits higher in the third quarter, prompting the company to confirm its outlook for the full year.
BMW’s net profit rose to EUR1.79 billion, equivalent to $2.1 billion, in the quarter, from EUR1.52 billion a year earlier.
However, earnings before interest and taxes fell 16% to EUR1.92 billion, hit in part by an increase in sales of less profitable electric and hybrid cars as the company rushes to meet European restrictions on greenhouse gas emissions from autos.
In the automotive segment, BMW’s EBIT margin increased to 6.7% in the quarter from 6.6% a year ago.
Revenue for the group dropped to EUR26.28 billion from EUR26.67 billion. BMW confirmed its outlook for 2020, saying pretax profit would be significantly below 2019’s level.
The company added that a high level of uncertainty remained because of the resurgence of Covid-19 infections in Europe and the U.S.
Kim Richters contributed to this article.
The Wall Street Journal
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