This week, BMW executives predicted solid sales for the fourth quarter and stated that their order book was full through the first few months of the following year. They added that they did not see the need to lower pricing, unlike some of its competitors.

As supply chain bottlenecks lessened, vehicle availability improved, but higher material and logistics costs remained, especially for labour, according to the German group.

Following the report, shares increased by 3.3%. The third-quarter results were mostly in line with forecasts and were presented in a more upbeat manner than other competitors, who cautioned of a muted market climate limiting demand.

When asked if BMW thought it was necessary to lower prices to increase demand for electric vehicles, especially in China, where there has been a fierce competition for market share this year, Chief Executive Oliver Zipse said that this strategy was not in BMW’s playbook.

“We have no interest in sinking prices to gain market share. That’s not our strategy. And as you can see, we are managing to grow substantially even with very acceptable prices,” he said.

With a 10.3% margin thus far this year, the luxury automaker is on track to meet its aim of an annual margin on earnings before interest and taxes (EBIT) in its vehicles segment of 9.0%–10.5%.

Elevated costs and all-electric vehicles propelled quarterly earnings beyond the projections of eight LSEG-surveyed analysts, reaching 38.5 billion euros ($40.92 billion). However, the group’s net profit declined by 7.7%, as the previous year’s amount was bolstered by a one-time gain when BMW assumed control of its joint venture in China.

Although there was a minor decrease in raw material prices during the quarter compared to the previous year, Chief Financial Officer Walter Mertl said that the firm nonetheless saw a 200 million euro impact on its raw material and net balance of currency positions.

He continued, “High labour costs from partners are one of the factors contributing to the continued high costs of materials and logistics, which will have a noticeable negative impact during the first nine months of 2023.”

Unlike rivals like Mercedes-Benz and Porsche, BMW did not address inflation or high interest rates in a statement regarding growth.

BMW exceeded its end-of-year target of 15% in the third quarter, with fully electric sales accounting for 15.1% of total sales. Sales increase is also being driven by models from the upper price range, such as the redesigned BMW X7, the 7 Series, and the BMW X5 and BMW X6 models.

The car industry’s free cash flow for the first half of this year was 5.7 billion euros, which is close to the 6 billion euros projected for the entire year.

(Adapted from USNews.com)