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      08-05-2020, 08:48 AM   #1
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BMW has first quarterly loss since 2009. Expects operating profit for the full year

Via Autonews:

BMW posts first quarterly loss since 2009


Losses at BMW Groupís automotive division dragged the company into the red for the first time in more than a decade, rounding out a dismal quarter for European automakers hit by the coronavirus pandemic.

BMW lost 666 million euros ($787 million) before interest and taxes between April and June, its first quarterly deficit since the financial crisis in 2009, down from a 2.2 billion euro profit in the same period in 2019, the company said Wednesday.

The earnings before interest and taxes (EBIT) margin in the company's automotive segment was pushed to a negative 10 percent in the quarter, slumping from a gain of 6.5 percent in the second quarter last year, as BMW ramped up expensive electric car technology investments and deliveries of new cars fell by 25 percent in the quarter.

BMW is the final German vehicle manufacturer to report after what has been a difficult quarter for automakers. Volkswagen Group lost 2.4 billion euros and cut its dividend, while Daimler argued that it had weathered the worst but still needs to slash tens of thousands of jobs.

Despite the difficult quarter, BMW said it expected to post an operating profit for the full year.

"We are now looking ahead to the second six-month period with cautious optimism and continue to target an EBIT margin between 0 percent and 3 percent for the automotive segment in 2020," CEO Oliver Zipse said in a statement.

In May, the automaker warned it would post a second quarter loss and slashed its outlook, forecasting an automotive EBIT margin of 0 percent to 3 percent this year, versus a forecast of 2 percent to 4 percent before the pandemic.

Sales have begun to recover in some markets, including in China, leading BMW to expect its core business to return a profit, but the rebound will not be enough to make up the shortfall of sales lost to the pandemic.

BMW will start producing the iX3 electric SUV this year in China, where it will also be first sold to customers.

Deliveries of electric and hybrid cars rose in the quarter as countries including Germany and France raised subsidies for the vehicles. BMW said it expects further growth from that sector in the second half of the year.

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      08-05-2020, 09:12 AM   #2
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BMW makes too many cars: 1, 2, 3, 4, 5, 6, 7, 8, X1, X2, X3, X4, X5, X6, X7, etc. So many places to trim the fat.
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      08-05-2020, 09:20 AM   #3
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Godamn, covids impact will truly be felt in the coming few years.

Such a huge impact that no one will forget in this generation.
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      08-05-2020, 09:21 AM   #4
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Anybody thinking what I'm thinking?

Bigger the grille = lower the sales!
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      08-05-2020, 09:30 AM   #5
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Meanwhile Tesla posted a profit in 2Q20.

The legacy guys getting their lunch snatched from under them.

To make an analogy...It's going to be interesting to see who goes the way of RIM or Apple/Google.
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      08-05-2020, 09:30 AM   #6
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This loss was already anticipated as cost cutting measures began earlier and will probably accelerate. The bigger question: what models will be retired earlier.
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      08-05-2020, 09:47 AM   #7
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Quote:
Originally Posted by ajacks8 View Post
Bigger the grille = lower the sales!
: that was a good one.
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      08-05-2020, 09:59 AM   #8
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If they're expecting a profit for FY20, this is nothing more than the effects of COVID. We will have to see how Q3 turns out - have people cancelled orders completely or will BMW catch up with everything that was supposed to deliver during Q2 but couldn't due to supply constraints/logistics, lockdown, etc.
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      08-05-2020, 10:03 AM   #9
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Quote:
Originally Posted by Bmwtechgeek View Post
BMW makes too many cars: 1, 2, 3, 4, 5, 6, 7, 8, X1, X2, X3, X4, X5, X6, X7, etc. So many places to trim the fat.
Cut the even Xs
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      08-05-2020, 10:37 AM   #10
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Frustratingly, any losses this year will be attributed to COVID-19 and not to poor design, thus sheltering Domagoj Dukec and his wretched ilk. He'll be left to create more awful front-ends and satin-pink EVs that look like women's cosmetic cases.
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      08-05-2020, 10:47 AM   #11
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Quote:
Originally Posted by Liquid2.0T View Post
Meanwhile Tesla posted a profit in 2Q20.

The legacy guys getting their lunch snatched from under them.

To make an analogy...It's going to be interesting to see who goes the way of RIM or Apple/Google.
Yep. The problem isn't the grilles or the number of models, it's their failure of an EV strategy.
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      08-05-2020, 11:12 AM   #12
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Quote:
Originally Posted by Bmwtechgeek View Post
BMW makes too many cars: 1, 2, 3, 4, 5, 6, 7, 8, X1, X2, X3, X4, X5, X6, X7, etc. So many places to trim the fat.
When factories shut down due to COVID, it doesn't really matter if you make 5 or 10 models! This is expensive and going to be a blood bath around Europe
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      08-05-2020, 11:23 AM   #13
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Quote:
Originally Posted by chris719 View Post
Yep. The problem isn't the grilles or the number of models, it's their failure of an EV strategy.
This problem is deeply rooted within the board of management. Prior to his retirement, guys like Klaus Froelich (acting CTO) would openly tell press that BEVs are not viable. To say that the vision steering BMW AG is myopic would be a gross understatement.

However, BMW was not alone in this view. Most of the automotive OEMs have been vaping petroleum for so long that they will spend every last Euro in the corporate coffer to convince the world that ICE obsolescence is a myth.

It is even more dire when your corporate vision is being cobbled together by guys that have been so entrenched in BMW's own world that the only thing they can do is keep spinning past success. The question is, how long can the Nokias and Sony Ericssons of the automotive world keep smoking the Symbian crack before the rug gets pulled from under their feet?
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      08-05-2020, 12:58 PM   #14
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Quote:
Originally Posted by ajacks8 View Post
Bigger the grille = lower the sales!
Quote

New models....
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      08-05-2020, 01:37 PM   #15
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LOL are there really people that are trying to pin this on EV strategy? This has absolutely nothing to do with EV's, grilles, number or models, etc and everything to do with an already softening marked continuing from 2019 and first and foremost a global pandemic. The theories are amusing to read and good for a laugh but nonetheless totally off base.
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      08-05-2020, 01:53 PM   #16
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Sorry to hear this, but it's not surprising (especially in our current state)
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      08-05-2020, 02:01 PM   #17
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Quote:
Originally Posted by Bmwtechgeek View Post
BMW makes too many cars: 1, 2, 3, 4, 5, 6, 7, 8, X1, X2, X3, X4, X5, X6, X7, etc. So many places to trim the fat.
That has nothing to do with the article but ok...
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      08-05-2020, 02:04 PM   #18
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Quote:
Originally Posted by heavyD^2 View Post
LOL are there really people that are trying to pin this on EV strategy? This has absolutely nothing to do with EV's, grilles, number or models, etc and everything to do with an already softening marked continuing from 2019 and first and foremost a global pandemic. The theories are amusing to read and good for a laugh but nonetheless totally off base.
Too much logic here. Please edit accordingly.

People can blame the grilles all they want but the X5 and X7 which reflect this new design strategy have been selling. So not sure if that argument makes any sense. Or are people going to start cherry picking certain models for this quarterly loss?
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      08-05-2020, 02:10 PM   #19
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Quote:
Originally Posted by heavyD^2 View Post
This has ... absolutely nothing to do with EV's ... everything to do with an already softening marked continuing from 2019 and first and foremost a global pandemic.
Yes.

However, it is nevertheless true that Tesla - an EV only automaker - managed to thrive during this time, increasing sales and profits alike.

Could BMW have been in that position? No, of course not. That was not possible given their business was built around ICE vehicles and was not being pumped full of money by folks betting (correctly it would appear) that this was the beginning of the second coming of the automotive revolution.

However, BMW absolutely did have an early leg up to be on trend, and they largely blew that. Had they managed themselves more efficiently and robustly, they might have been a little more Tesla-y in these trying times and a little less everyone-else-y.

Quote:
... number or models, etc ...
Again, yes you're right. But at the same time, BMW's lineup is too fat and they are well aware of that (even if they'll try to convince you all is well), and you better believe they are going to make some changes that will include cutting some slow selling form factors.

Had they gone into the pandemic with less models would they have come out ahead? Hell no! They'd still have gotten killed. But at least they'd be better off in that they wouldn't be trying to cut that fat while figuring out how to return to profitability by fixing other broken things.

So yeah, you're right, but the mention of these other issues in this thread isn't totally off base. There are plenty of chinks in the armor, and we know that's the case because they have their best talent tending to it. Let's hope it's enough to right the ship quickly. I think they'll be fine, but this isn't a slam dunk.
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      08-05-2020, 02:14 PM   #20
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Quote:
Originally Posted by Liquid2.0T View Post
Meanwhile Tesla posted a profit in 2Q20.

The legacy guys getting their lunch snatched from under them.

To make an analogy...It's going to be interesting to see who goes the way of RIM or Apple/Google.
Yes, but its a sorta profit. Tesla lost $100 mill making cars. The profit was on government subsidies from what i understand as seen in the WSJ today.
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      08-05-2020, 02:51 PM   #21
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Quote:
Originally Posted by quick6 View Post
Yes, but its a sorta profit. Tesla lost $100 mill making cars. The profit was on government subsidies from what i understand as seen in the WSJ today.
Read the same. $400 million from selling credits to domestic automakers.
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      08-05-2020, 03:16 PM   #22
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Quote:
Originally Posted by Liquid2.0T View Post
Meanwhile Tesla posted a profit in 2Q20.

The legacy guys getting their lunch snatched from under them.

To make an analogy...It's going to be interesting to see who goes the way of RIM or Apple/Google.
Another anology is the quartz crisis and its impact in legacy swiss watch manufacturers. Eventually quartz watches flooded the market with cheaper, more accurate and easier to maintain timepieces. Today the only swiss watchmakers that survive are the ones that stuck to their guns sell their watches at a premium as luxury status symbols for the most part. Once cheap electric cars flood the mainstream market and with luxury features being ubiquitous these days, it'll be interesting to see how the legacy upscale car manufacturers handle the electric crisis - do they go with the flow and reinvent themselves like Omega, stick to their guns and become powerhouses like Rolex, introduce something completely new to reinvigorate the product/market like Audemars Piguet, or go the way of the dodo like hundreds of other swiss manufactures did.
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