High prices, steady supply chain protect BMW from scarce chips

While rising raw material prices impacted earnings this year, the company's strong relationship with suppliers has cushioned the blow, chief executive Oliver Zipse said
High prices, steady supply chain protect BMW from scarce chips

BMW expects strong electric car sales to carry into 2022.

BMW beat forecasts with a 42% increase in third quarter profits to €2.58bn as higher prices and strong electric vehicle sales offset lower deliveries due to scarce chips.

In an earnings call, finance chief Nicolas Peter said the company was confident of topping its target for a 10% margin on pre-tax earnings this year, though the fourth quarter could be slightly dampened by higher tax payments and investment costs.

Looking ahead, the company expects strong electric car sales to carry into 2022, Mr Peter said.

While rising raw material prices impacted earnings this year, the company's strong relationship with suppliers has cushioned the blow, chief executive Oliver Zipse said.

"We have always had good oversight over our supply chain. That is paying off now – right down to the raw materials," he said.

Carmakers from Volkswagen to Stellantis to Renault saw dampened third quarter sales due to scarce chip supply, with consultancy BCG reporting in September it expected a total of 10m to 11m fewer cars to be produced worldwide this year because of the shortage.

But luxury producers like BMW and rival Daimler, which were able to raise prices to offset losses, fared better than others, with both companies reporting an earnings margin of 7.8% in the third quarter, outstripping Volkswagen's 4.9%. BMW shares ended 1.5% higher on Wednesday. 

• Reuters

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