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BMW Group Adjusts Full-Year Guidance For 2024 Following Q3 Challenges And Market Dynamics
The BMW Group anticipates increased deliveries in the last quarter of 2024. This follows a challenging third quarter due to issues with the Integrated Braking System (IBS). These technical problems, along with weak demand in China, affected sales and revenue from July to September. The company had to adjust its financial guidance for 2024 because of additional IBS-related warranty provisions.
Despite these challenges, the company's e-mobility sector showed strong growth. Deliveries of Battery Electric Vehicles (BEVs) rose by 10.1% compared to the previous year, with fully electric vehicles making up 19.1% of total sales. In the first nine months, BMW delivered 1,754,157 vehicles, a decrease from 1,836,563 in 2023. In Q3 alone, they delivered 540,881 vehicles across their brands.
The third quarter saw significant financial impacts due to IBS-related delivery stops and delays. BMW's revenues fell to €32,406 million from €38,458 million in 2023, marking a decline of 15.7%. The automotive segment's revenues also dropped by 13.2% to €27,854 million during this period.
BMW's global presence helped balance sales across different regions. Outside China, the BMW brand grew by 4%, gaining a slight increase in global market share. In Europe, growth was moderate at 7.6%, driven by double-digit increases in Spain, UK, France and Italy.
The company is committed to investing heavily in new products and technologies despite current challenges. Research and development spending reached €6,642 million in the first nine months of 2024, up by 27.2% from the previous year. This investment focuses on electrification and digitalisation under the NEUE KLASSE initiative.
BMW's operating profit (EBIT) for Q3 was €1,696 million compared to €4,352 million in Q3 2023—a drop of 61%. The group's earnings before tax decreased significantly to €838 million from €4,063 million last year.
Challenges and Strategic Adjustments
The company faced lower earnings and increased inventory levels due to delivery stops and reduced sales volumes. Free cash flow was impacted negatively by high capital expenditure and changes in working capital amounting to €-1.934 million over the period.
BMW aims for inventory levels similar to last year's by releasing stock vehicles after IBS exchanges are completed. The forecasted free cash flow remains above €4 billion despite ongoing investments.
Financial Services Growth
The Financial Services Segment experienced significant growth in new business contracts during the first nine months of the year. New financing and leasing contracts rose by 12.5% to reach 1,252,251 contracts compared to last year.
The segment's volume of new business also grew significantly by 13.6%, reaching €46,531 million during this period.
Adjusted Guidance for Year-End
For the remainder of the year, BMW plans to continue implementing measures related to IBS technical campaigns promptly. They aim to deliver previously blocked vehicles as demand remains robust for premium models globally.
The company confirms its adjusted full-year guidance: Group earnings before taxes will decrease significantly while vehicle deliveries will be slightly lower than last year.
BWM expects an EBIT margin between 6% and 7% for this fiscal year while maintaining a return on capital employed (RoCE) between 11% and 13%. Return on equity (RoE) is projected at between 15-18%, reflecting improved business development conditions within their Financial Services Segment.
In summary: "After extraordinary challenges in Q3," said Oliver Zipse—Chairman of BMW AG—"we look ahead: In Q4 we're back on track for stronger earnings despite planned high upfront expenditures." He added that investments are crucial for continuing success stories like NEUE KLASSE next year onwards."
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