BMW Group lowered its profit margin expectations for its automotive segment for 2022 due to the war in Ukraine, which will have an effect on supply chains and weigh on the global economy.
BMW now predicts its car segment margin before interest and taxation (EBIT) to be in a range of 7 percent to 9 percent due to the war's effects on production. Margins in 2021 were more than 10 percent.
Without the impact of the war, BMW would have targeted a range of 8 percent to 10 percent, the company said Wednesday.
BMW said that while it was still able to source some parts from western Ukraine and was engaging suppliers in other locations worldwide to keep up production, further production interruptions were to be expected in coming weeks.
The automaker had expected to deliver an even higher number of vehicles this year, but now expects to be on par with 2021. BMW sold a record 2.52 million vehicles last year despite semiconductor shortages, and had a 10.3 percent EBIT margin for 2021, its highest since 2017.
BMW said the war in Ukraine made it difficult to give accurate guidance for 2022 and that it could not factor any potential long-term implications into its forecast.
"We are optimistic we can mitigate the wire harness shortages," CEO Oliver Zipse said in an interview with Bloomberg Television. BMW has more than a single supplier in Europe and is able to cope with the situation, he said.
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The company said it does not see the semiconductor shortage improving until the second half, a problem that has idled production lines for the industry across the globe.
BMW said it expects 15 fully electric models to be in production this year, including some in pre-production, and it highlighted the rollout of the new i7 luxury sedan.
The company also said it is developing new battery technology and could deliver early on its target of having fully battery-powered vehicles making up half its global sales by 2030.
BMW previously said that it expects sales of fully electric vehicles to double in 2022, as the company’s i4 coupe and iX SUV go on sale in major markets.
Overall earnings for BMW, including its finance and motorcycle segments, should increase significantly this year, the company said, helped by the full consolidation of its Chinese BMW Brilliance joint venture.
BMW got approval from Chinese authorities in February to raise its stake in the business with Brilliance China Automotive Holdings to 75 percent from 50 percent, one of the first Western automakers to benefit from the relaxing of China’s foreign ownership rules. The inclusion will have a positive effect of between 7 billion euro ($7.7 billion) and 8 billion euro on group earnings before taxes.
BMW Chinese venture assembles BMW-branded models for sale locally and the all-electric iX3 SUV, which is also exported to global markets.
