Recently, BMW Group announced its third-quarter financial results (July to September). Revenue fell by 15.7% year-over-year to €32.406 billion, with automotive revenue down by 13.2% to €27.854 billion. Earnings before interest and taxes (EBIT) dropped by 61% year-over-year to €1.696 billion, while EBIT from the automotive segment fell by 79.8% to €634 million. The automotive EBIT margin fell to 2.3% from 9.8% in the same period last year, well below BMW's 2024 target (at least 6%) and marking its lowest level since Q2 2020. Net profit dropped by 83.8% to €476 million.
BMW Group's core profitability metrics reached their lowest levels in over four years, due to costly recalls and weakened demand in China. The company set aside nearly €1 billion (about $1.1 billion) to address recall issues and was forced to temporarily halt deliveries of several hundred thousand high-end vehicles.
In terms of sales, BMW Group's deliveries declined in all markets globally in Q3. However, the company achieved some success in electric vehicles, with global deliveries of pure electric models like the BMW i4 sedan and iX1 SUV increasing by 10% year-over-year.
In its largest market, China, BMW Group's sales fell by 30% from July to September, as consumers cut back on luxury vehicle purchases and turned to more affordable options from Chinese automakers. Recalls also contributed to the sales decline.
Due to reduced sales and rising inventory levels related to the recalls, BMW Group's free cash flow for Q3 was negative €2.48 billion, down from €2.618 billion in the same period last year. The company aims to lower its inventory levels to last year's Q4 levels and achieve a full-year 2024 target of over €4 billion in free cash flow.
BMW Group's CFO, Walter Mertl, noted that the company expects demand in China, the world's largest automotive market, to remain sluggish in Q4.
BMW Group reaffirmed its adjusted full-year 2024 forecast, anticipating a significant decline in pre-tax profit, slightly lower vehicle deliveries compared to last year, and an EBIT margin between 6% and 7%.
Following the release of this report, BMW Group's stock price fell by 6.7%. Year-to-date, the stock has dropped more than 30%.
