BMW: coronavirus will affect new car demand for rest of 2020
BMW
Firm lowers profit forecast, warns European sales might not recover when restrictions ease as fast as in China
BMW boss Oliver Zipse has warned that demand for new cars in Europe is likely to be impacted for the remainder of the year by the coronavirus pandemic, even when lockdown restrictions are eased and dealerships can reopen.
Restrictions on movement and the enforced closure of retail outlets, including car showrooms, have been in place across Europe since mid-March and had a huge impact on new car sales across the Continent. For example, registrations in the UK were down 97.3% year-on-year in April.
Various European countries are beginning to slowly ease restrictions, which could lead to car dealerships opening with social-distancing protocols in place. There's hope that Europe could mirror China, where the lockdown was introduced far earlier and car sales are already returning to pre-pandemic levels.
But during a presentation on the BMW Group's latest financial results, Zipse said: "I want to make it quite clear: China is only of limited use as a blueprint for development in other markets. In our most important sales region, Europe, the picture is extremely mixed.
"It is clear that automotive demand in countries that have been hard hit by the pandemic, like Spain, Italy and the UK, will probably remain relatively low for the rest of the year."
The BMW Group revised its financial outlook in March but has now lowered it again, with Zipse saying the firm expects both sales and profit to be "significantly" lower than in 2019.
He added: "It has become apparent that the measures to contain the corona pandemic have lasted longer in many markets. It is therefore clear that delivery volumes in these markets are not going to return to normal within just a few weeks, as was assumed."
BMW Group sales were down 20.6% globally in the first three months of 2020, including an 18% decline in Europe. But Zipse noted that sales subsequently fell by 44% globally in April.
Despite that 20.6% decline from January to March, the BMW Group's pre-tax profit of €798 million (£686m) was actually up 4.7% on the same period last year, largely due to a one-off charge in 2019 relating to EU antitrust proceedings.
Zipse said that the BMW Group remains committed to meeting both the new European Union fleet emission targets and Euro 6d emissions standards, and that it was "strongly opposed to calls for moratoria" that would postpone deadlines in the wake of the coronavirus outbreak.
He revealed that the BMW Group's electrified vehicle sales grew by 14% in the first quarter of 2020 and said "postponing the targets and deadlines would reward those who didn't make adequate preparations".
Zipse added that the BMW Group remains committed to investing more than €30 billion (£25bn) in research and development by 2025, including for battery electric and hydrogen fuel cell technology.
He added: "It is also clear that the impact of the coronavirus comes on top of the complete transformation of mobility. As a result, it will accelerate the consolidation of our industry."
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