BMW profits fall 80% as Chinese demand crashes

BMW has posted a slump in third-quarter profits as it faces challenges from issues with its braking systems and a slowdown in consumer demand in China.
The carmaker has reported a 79.4 per cent decline in profit before tax from €4.2 billion to €838 million in the three months to September 30 amid low consumer confidence and a drop in sales volumes in the Chinese market. Group revenues were down 15.7 per cent from €38.5 billion to €32.4 billion over the three-month period.
BMW said it had strengthened its position in Europe and achieved “solid growth” in the region over the first nine months of its financial year, while maintaining a “robust competitive position” in the US.
However, the manufacturer said that the Chinese market continued to have an impact despite the Chinese government’s stimulus measures to address difficulties in its real estate sector. The weakening in the Chinese economy has caused issues for western companies including Smith & Nephew, BP, Diageo and AstraZeneca.
In a statement BMW said: “The slight recovery that invigorated the global economy at the beginning of the year continued in the third quarter of 2024. Inflation stabilised or continued to decline in the USA and Europe. In response, central banks have initiated a shift in their interest rate strategies and have begun to lower benchmark rates.
“However, geopolitical developments and trade conflicts continue to present persistent challenges. In China, the ongoing crisis in the real estate sector and a general downturn in domestic demand are further slowing growth.”
• Germany faces downturn as growth slows
BMW’s deliveries of electric vehicles under its Mini, Rolls Royce, and namesake brands increased by 18.1 per cent to 294,052 in the first nine months of the year. Total car sales were hit by a halt to deliveries owing to issues with a component in its integrated brake system; overall deliveries declined by 4.5 per cent to 1,754,157 units in the nine-month period.
The technical problems had a “notable impact” on earnings and the group has already adjusted its guidance for the full year. BMW’s shares fell 6.53 per cent or €4.74 to €67.88. So far this year the shares have fallen 33 per cent.
Smith & Nephew blamed ongoing issues in China as it cut its full-year revenue target last week. The pharmaceutical company’s warning came after BP said the slowdown had contributed to a 30 per cent drop in quarterly profits, and Diageo was knocked by Chinese anti-dumping tariffs on brandy imports. AstraZeneca has also faced problems in the country as it launched an investigation into one of its senior executives, which was in addition to the detention of five present and former employees over the handling of patient data.