BMW's Q2 profit margin falls short due to China market challenges

BMW reported a lower-than-expected profit margin in its core automotive segment for the second quarter of 2024, reflecting increased competition and weaker demand in China. The German luxury automaker's earnings before interest and tax (EBIT) margin decreased to 8.4%, down from 9.2% in the same period last year. This figure fell short of the 8.7% margin anticipated by analysts, according to a consensus compiled by the company.

The decline in profitability comes amid heightened investment by BMW, with the carmaker setting records in spent year. This figure fell short of the 8.7% margin anticipated by analysts, according to a consensus compiled by the company.
ding on model revamps and electric vehicle development. BMW's investment in these areas is expected to peak this year, contributing to the strain on its margins.

Despite these challenges, BMW reaffirmed its guidance for 2024, projecting a slight decrease in the group’s pre-tax earnings due to rising costs associated with research and development, manufacturing, and personnel. The automotive segment’s margin for Q2 was at the lower end of the company's full-year target range of 8-10%.

The company is facing intensified pressure in China, its key market, where local car manufacturers are expanding their market share with lower-cost electric vehicles. This shift has forced European competitors, including BMW, to adjust pricing strategies. Although BMW experienced a 4% decline in sales in China over the first half of the year, its performance in the region was comparatively better than that of Volkswagen and Mercedes-Benz.

BMW anticipates that the economic situation in China will stabilise in the third quarter, according to a company statement. The automaker remains optimistic about a rebound in the market as it navigates these turbulent conditions.