BMW aims for steady margins in 2024 despite peak electric spending

BMW announced Thursday that its target for 2024 automotive profit margins is to remain broadly in line with last year's. The company anticipates a slight increase in car sales as spending on launching electric vehicles across its model line-up peaks this year.

"We are investing in our company's future like never before," said finance chief Walter Mertl.

BMW shares experienced a 1% decline in early trading following the announcement.

The premium German automaker highlighted a significant rise in fully electric vehicle sales expected for 2024, following a 74% surge in 2023, with electric cars accounting for 15% of sales last year, showing a "significant double-digit percentage" increase so far this year.

Expecting overall deliveries of key brands BMW, MINI, and Rolls-Royce to surpass 2023 figures slightly, BMW projects the operating profit margin in its core automotive division to range between 8-10%, compared to 9.8% in 2023.

The 2023 margin, reported last week, fell short of expectations due to increased costs, with BMW also reducing dividends as the consolidation of its Chinese joint venture impacted the bottom line.

Analyst Daniel Roeska of Bernstein noted potential disappointment because of BMW's lack of announcement regarding extending its current share buyback plans, contrasting with accelerated buyback programs from other automakers.

BMW expects capital expenditure and research and development spending to support its transition to fully electric models to reach their peak in 2024.

Used car prices, which had surged because of pandemic-related supply-chain shortages, have declined as automakers ramp up production.

BMW anticipates a decrease in revenue from selling returned leased cars this year compared to 2023.

Source: Newsroom