BMW expects to earn a profit this year if demand continues to recover, despite posting a record loss for its auto division in the second quarter after sales declined 25% because of the coronavirus lockdowns, it stated on Wednesday.
The German manufacturer of BMWs, Minis, and Rolls-Royces said sales had started to recover during the recent three-month period, including a 17% increase in deliveries in China, but the recovery would not entirely make up for sales lost to COVID-19.
As a result of the sales decline, and higher costs for developing low-emission vehicles, BMW posted a pretax loss of 498 million euros, its first in more than 11 years, and an operating loss of 666 million euros ($790 million) for the quarter.
Shares in BMW dropped 3% after the results, with some experts saying they had not expected such a big loss in revenues before interest and taxes (EBIT).
“What matters now is how robust this upward trend is and when individual markets will follow suit,” said CEO Oliver Zipse, adding that its total car sales in July were higher compared to 2019.
BMW said, however, that its outlook did not factor in the potential impact of the second wave of coronavirus infections, nor the prospect of a more sustained or deeper recession than expected in its major markets.
Zipse said on a call that developments in the United States were “extremely worrying”.
Sales in the United States comprised 12.6% of deliveries in the first half of 2020, dropping from 15.2% in 2020. Overall, BMW said it expected worldwide demand for luxury cars to fall by a fifth this year.
BMW reiterated that it expected to make a pretax profit in 2020, albeit below last year levels, and for car deliveries to customers to decline significantly this year.