Frankfurt (Germany) (AFP) – Net profit at premium carmaker BMW fell over a third in the second quarter, the firm said Thursday as it prepares to cut almost 10 percent of its German workforce. Net income in the three months to the end of June came in at 1.2 billion euros ($1.4 billion), BMW said, a fall of almost 35 percent on this time last year. That was BMW’s lowest quarterly profit since late 2024 when faulty brakes fitted to vehicles ended up costing the carmaker hundreds of millions of euros.
Challenging conditions in China — where a sluggish economy and cutthroat competition have hit automakers — drove the result, BMW said. Even as vehicle deliveries rose in Europe and the United States, they plunged 30.2 percent in China over the quarter. “Competition in the global automotive market has sharpened noticeably,” BMW finance boss Walter Mertl said, adding that the company would let an unspecified number of people go to bring costs down. “We are intensifying and accelerating our efficiency measures,” he said. “Our goal is to reduce complexity and establish a sustainably lower cost base.”
A BMW source told AFP on Wednesday that it would offer severance to almost half its German employees with a view to cutting about 8,000 jobs by the end of 2027. BMW has roughly 85,000 permanent employees in its home country. Speaking on a press call, BMW CEO Milan Nedeljkovic said the company was preparing for Chinese competitors to arrive in Europe even if the impact on BMW’s continental sales had been limited so far. “We are of course seeing rising sales from Chinese competitors in Europe,” he said. “We need to see how the market develops in future and are preparing ourselves.”
Other German carmakers have also looked to cut overheads as collapsing sales in China have started to look less like a blip and more like a new normal at the same time as Chinese car exports rise. Mercedes-Benz also has a voluntary redundancy programme, and Volkswagen, which apart from its namesake also operates premium brands like Audi and Porsche, is weighing up to 100,000 job cuts across the group, including 50,000 that have already been agreed.
BMW confirmed its adjusted guidance for the year, saying it expects profit to fall over 10 percent in 2026. The owner of the Mini and Rolls-Royce brands issued a shock profit warning last month and said its margin at its core cars business could this year be as low as one percent, blaming weakness in China.
© 2024 AFP
