BMW issues second profit warning as Chinese competition drives restructuring
German carmaker BMW has issued its second profit warning in a year, citing restructuring costs, including significant job cuts, as it faces growing competition from lower-cost Chinese manufacturers.
The company cut its forecast for its annual operating profit margin to between -0.5% and 0.5%, compared with its earlier expectation of 4% to 6%. The downgrade reflects additional fourth-quarter costs linked to a restructuring programme that includes 8,000 job cuts in Germany.
BMW reported an 11% decline in third-quarter pre-tax earnings to €2.1 billion. Sales in China, one of its key markets, fell by 22% in the first nine months of the year, reflecting a wider slowdown in the country.
Chief executive Milan Nedeljković said the company would accelerate structural changes in response to developments in the automotive industry. China would remain a key focus, with BMW beginning the launch of its Neue Klasse vehicle range there this month with the iX3.
The warning follows a similar downgrade by Mercedes-Benz last week, highlighting mounting pressure on Germany’s automotive industry as manufacturers struggle to compete with Chinese rivals and adapt to the transition to electric vehicles.
BMW is also writing off investments in previous vehicle and technology generations as it introduces its new electric vehicle range.
via The Guardian
