BMW has been hard hit by the coronavirus pandemic as the German automaker posts its first quarterly loss since 2009. This marks the first time the company has been in the red in over a decade as the crisis slammed all corners of the European automotive market.
BMW
The company lost €666 million before interest and taxes (EBIT) between April and June, its first quarterly deficit since the financial crisis in 2009, down from a €2.2 billion profit in the same period of 2019, the company announced in a report last Wednesday.
Their earnings had dropped to -10% in the quarter, dropping from a gain of 6.5% in the same quarter last year, as the German automaker ramped up pricey electric car technology investment and deliveries of new cars fell by as` much as 25%.
Other companies were also hit hard by the pandemic. Volkswagen noted a loss of €2.4 billion and cut its dividend, while Daimler reported that it needed to cut thousands of jobs.
Despite this troubled start, the company announced it expects to run at a profit and remains on course to achieving its targets for the full year.
The company implemented controlled cutbacks and foresaw a drop in global demand, but plans to restart full production as soon as they are able.
CEO Oliver Zipse said in a statement: “Our swift responsiveness and consistent management strategy enabled us to limit the impact of the corona pandemic on the BMW Group during the first half of the year.
"We are now looking ahead to the second six-month period with cautious optimism and continue to target an EBIT margin between 0% and 3% for the automotive segment in 2020.
“We are monitoring the situation very closely and managing production capacities in line with market developments and regional fluctuations in customer demand.”
Back in May, they warned of second-quarter losses, predicting an automotive EBIT margin of 0-3% this year, versus a forecast of 2-4% before the pandemic.
Sales have begun to recover in some markets, including China, leading BMW to expect its core business to return to normalcy soon, but it is unlikely they will be able to fully recover the losses from the crisis.
BMW is due to start producing the iX3 electric SUV this year in China, where it will be first made available to customers.
They are expected to begin production of more commercially viable electric cars going into the future.
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