BMW’s Q1 profits amplify despite volatility in raw material prices

BMW’s Q1 profits amplify despite volatility in raw material prices

by Pranali Mehta

BMW AG has reported a surge in its profits during the first quarter, primarily elevated through a re-evaluation of the company’s strong pricing and its stake in its Chinese joint venture, BMW Brilliance. Despite the volatile prices for energy and commodity, the German luxury auto giant has uplifted its 2022 outlook.

Notably, the global semiconductor crisis has severely hit car production across the industry, however, this has had no major impact on BMW vehicle demand which remained robust throughout the period.

Oliver Zipse, the CEO of BMW cited that they are receiving pre-orders for their products in bulk, the highest in the history of their company, and based on market estimations the demand will continue to rise.

However, the chip shortage will drastically impact the supply chain as it would not begin to ease by the end of 2022, further resulting in facing it throughout 2023 as well, Zipse stated.

The semiconductor chip shortage has pushed automakers, including BMW to focus on manufacturing higher-margin vehicles such as SUVs. In addition, the reduction in supplies has elevated the prices of the vehicles with no effect on affluent buyers as they can afford to spend more.

The boosted prices of BMW have put new models out of reach for ordinary people, for instance, the average vehicle transaction price in the U.S. accounts for USD 44,129. Moreover, this supply-constrained market has also significantly increased the prices of used cars.

BMW stated that its operating margin is expected to range from 7% to 9% despite the automotive segment’s price volatility. The company also recorded a net profit of around USD 10.7 billion worth as compared to USD 2.9 billion last year.

The German luxury carmaker made an operating profit of around USD 3.5 billion, higher than the estimations of USD 3.1 billion, excluding the results of the stake in its Chinese joint venture.

Source Credit:

https://money.usnews.com/investing/news/articles/2022-05-05/bmw-q1-profit-lifted-by-chinese-joint-venture-strong-pricing

Pranali Mehta

A chemical engineer by qualification, Pranali Mehta dutifully walked down the slated path and worked in a chemical firm for a year. Her passion for writing however, pushed her into experimenting with the same as a career. With over three years of experience in content writ Read more...