German automotive giant BMW AG has adjusted its financial outlook for 2024, citing a recent slump in global sales. This adjustment stems from a combination of factors, including technical issues and weakened demand in key markets.
In a press release issued on Tuesday, BMW’s Board of Management announced the revised guidance for the upcoming year. The decision was influenced by a series of challenges, including delivery stops and technical problems related to the Integrated Braking System (IBS). The IBS issues, which have impacted over 1.5 million vehicles, are expected to negatively affect sales in the latter half of 2024, resulting in additional warranty costs for the company.
Furthermore, despite government efforts to stimulate the economy, BMW is facing sluggish demand in China, a critical market for the automaker. These factors have led BMW to adjust its expectations for 2024. The company now predicts a slight decrease in deliveries compared to the previous year, with an EBIT margin projected between 6% and 7%. The Return on Capital Employed (RoCE) is anticipated to be between 11% and 13% for the year. Despite these challenges, BMW expects its Free-Cash-Flow in the Automotive Segment to remain above €4 billion ($4.41 billion) for the financial year.
The revised earnings and additional inventory are expected to impact the third quarter more significantly than the fourth quarter of 2024. The full quarterly results and the adjusted outlook report will be released on November 6, 2024.
This recent revision in BMW’s financial outlook follows a series of events that have impacted the company’s performance. In September, BMW recalled over 140,000 Mini Cooper SE electric vehicles globally due to battery overheating problems. This recall came on the heels of a notable achievement in August when BMW surpassed Tesla in BEV registrations in Europe for the first time. However, the recent technical issues and the recall have dampened the company’s momentum, leading to the adjusted financial outlook for 2024.
