BMW Expected to Hit Profit Target, As 1st Quarter Sales Jump By A Third.
“The stabilization also reflects BMW’s considerable reduction of its fleet CO2 emissions to below the stricter targets in the EU in 2020, and the expectation of full compliance in 2021”
BMW expects to more than double profits in 2021 compared with the previous year’s coronavirus-ravaged bottom line, while ratings agencies agree and like its electric car plans.
Germany’s Center of Automotive Management (CAM) points out that last year BMW made only €930 ($1,100) per vehicle and if it doubled that in 2021 it still wouldn’t come close to the heady days of 2017 when profits hit €3,000 ($3,600) per car.
On Thursday, BMW said sales of its cars and SUVs, including Mini and Rolls-Royce, accelerated 33.5% in the first quarter of 2021 to 636,606, with electrified (pure electric, plug-in hybrids and hybrids) sales more than doubling.
“This puts us on track to deliver more than 100,000 fully-electrified vehicles this year,” BMW said in a statement.
BMW shares rose just over a half of a percent by midday Thursday to €89.68. BMW shares have been on a charge since January’s low of about €68.
Last month, BMW announced 2020 profit before tax fell 27% to €5.2 billion ($6.2 billion) while the automotive profit margin fell to 2.7%. The company said this will more than double in 2021 to between 6% and 8%.
BMW said it expects at least half of its sales to be battery electric by 2030. All-electric launches include the i4 sedan soon and the iX SUV by the end of the year, joining the i3 city car and iX3 SUV. BMW’s MINI subsidiary also has an electric version and is set to go all-electric by 2030. Electric versions of the big 5 Series sedan, 7 Series flagship and X1 SUV are scheduled.
Stable not negative
Moody’s Investors Service raised its rating on BMW to “stable” from “negative” last month as global sales of cars and SUVs rise 7% in 2021 and 6% in 2022, despite short-term problems in the first half of 2021 from slow coronavirus vaccinations and shortages of semiconductors. Profit margins will more than double to 7%.
“The stabilization also reflects BMW’s considerable reduction of its fleet CO2 emissions to below the stricter targets in the EU in 2020, and the expectation of full compliance in 2021,” Moody’s said in a report.
S&P Global Ratings said despite uncertainty about the rate of the global auto market’s recovery, fragile economic conditions and the chip shortage, BMW will make financial progress thanks to a shift to more profitable models.
S&P, which has a negative rating on BMW, was less sanguine about its competitive position in the electric vehicle market but said its ramping up of new model launches was a positive.
“In our view, the successful execution and positioning of these models will be crucial for BMW to face challenges from EV launches by competitors such as Mercedes, Audi, Porsche and Volvo, as well as pure BEV players such as Tesla,” S&P said in a report.
CAM said last year Mercedes made the most money per vehicle, €2,101, ($2,500) with global sales leader Toyota 2nd on €1,233 ($1,500). VW, with all its brands like Audi, Porsche and Skoda made €731 ($870) per car. GM made €661 ($785) and Ford €341 ($405).