More spending and difficult China business: German carmakers with less profit
BMW recorded a 14.6 percent decrease in profit in the first half of this year compared to the same period in 2023. Last year, the company reported a surplus of 6.6 billion euros, which this year was 5.7 billion. Revenue shrank by 0.7 percent in the same period. The profit margin fell from 10.6 to 8.6 percent.
Intense competition, particularly in China, where there has been persistent consumer caution, higher material and fixed costs, and increased research and development expenses impacted the results, BMW explained. In China, 4.3 percent fewer cars were delivered in the first half compared to the previous year. "The market development in China has fallen short of our expectations," the company said. Overall, deliveries remained stagnant at around 1.2 million cars sold.
Europe's largest automaker, Volkswagen, also earned significantly less from January to June compared to the same period in 2023. The group's after-tax result was 7.3 billion euros, a 13.9 percent decrease. Revenue increased by 1.6 percent in the same period, but the profit margin fell from 7.3 to 6.3 percent - "not enough for our ambitions," said Chief Financial Officer Arno Antlitz.
VW CEO Oliver Blume described the result of Europe's largest automaker as "solid." The company attributed the decrease in operating profit to unplanned provisions for a severance program and increased fixed costs. The vehicle sales decreased slightly compared to the previous year, from 4.4 million vehicles to 4.3 million cars.
The Japanese competitor, Toyota, the world's largest automaker, published quarterly figures on Thursday. Thanks to the currently weak Japanese yen, Toyota achieved a profit of 1.3 trillion yen (8.1 billion euros) in the quarter from April to June, an increase of 1.7 percent compared to the previous year. The weak yen and cost savings could offset decreased sales and a decline in production in the domestic market.
BMW's struggles in the automobile market extend beyond Europe, as they also experienced a 4.3% decrease in car deliveries in China during the first half of the year. This decline in demand might be attributed to intense competition, persistent consumer caution, higher costs, and increased research and development expenses in the Chinese market.
Despite China being a significant market for many automakers, BMW's revenue in this region only makes up a fraction of its overall global sales, with around 1.2 million cars sold globally in the first half of the year, showing that the company relies on a diverse range of markets for its success.
