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Research costs dim outlook

Automotive group says costs to build electric future highest ever, while supply problems and China sales hurt other marques.
Posted on 15 May, 2024
Research costs dim outlook

BMW predicts it will suffer a slight drop in pre-tax profit this year and says its forecast is based on higher costs for research and development, manufacturing and personnel.

It comes after the German carmaker reported its first-quarter pre-tax profit fell 18.9 per cent year-on-year to €4.1 billion (NZ$7.4b), despite group car sales climbing by 1.1 per cent over the same period.

It says its pre-tax margin in the car segment also fell to 8.8 per cent from 12.1 per cent a year earlier as persistently higher costs weighed on its bottom line and demand for luxury cars in China remained muted, reports Reuters.

BMW adds it is investing more in electric vehicles and model revamps in 2024, with spending set to eclipse the €7.5b forked out in these areas last year.

Walter Mertl, chief financial officer, says: “This year, it will be more important than ever to maintain our strategic course. The investments needed in the digital and electric future of our company are the highest they have ever been.”

Supply woes

Audi also suffered a drop in profits and revenue in the first quarter, blaming the results on “logistics and supply” headwinds that impacted deliveries of its cars with V6 and V8 engines.

The marque, part of the Volkswagen Group, has announced profit fell 74 per cent to €466m in the quarter from €1.8b in the same period a year ago. Its revenue dropped by 19 per cent to €13.7b.

Audi says it had to stop selling models with V6 and V8 engines because of limited availability of a key component from a supplier, reports Automotive News Europe.

The brand adds it is working to address the problem and adding a second supplier of the vital part.

China decline

Ferrari sales in greater China dropped 20 per cent in the first quarter of this year, compared with the same spell of 2023.

Gains for the Italian brand in Europe and the Americas failed to offset the slump and, as a result, overall global deliveries were flat for the first three months of this year.

Ferrari’s adjusted earnings before interest, taxes, depreciation and amortisation rose 13 per cent in the first quarter to €605m, reports Automotive News Europe.