Profit margins are set to shrink at BMW’s car division after the German motor group became the latest in the sector to warn of problems ranging from chip shortages to new supply chain disruptions caused by Russia’s invasion of Ukraine.
BMW said that it expected an earnings margin before interest and taxes of between 7 per cent and 9 per cent for its car business, rather than the 8 per cent to 10 per cent previously forecast.
The carmaker, which has owned the British Mini marque since 2000, halted or slowed production at some German factories after the invasion because of supply chain bottlenecks, but it will be back to full production next week, according to Milan Nedeljkovic, its production chief. However, assembly of Minis at its Oxford plant remains suspended.
BMW has shifted its schedule to compensate for lost production time, Nedeljkovic said — for example, by completing renovation works at certain factories planned for later in the year.
Russia’s invasion of Ukraine and Covid-related disruption in China have forced carmakers from Toyota to Tesla to mothball plants and raise prices. BMW said that while it was still able to source some parts from western Ukraine and was working with suppliers elsewhere to keep up production, more interruptions should be expected.
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Rising raw materials prices are likely to cost the carmaker hundreds of millions of euros this year, Nicolas Peter, its finance chief, said.
BMW sold a record 2.52 million vehicles last year and had expected to beat that figure this year, but it now expects production to be on a par with 2021.
