German automaker BMW has said that it was targeting 2024 automotive profit margins broadly in line with last year with an expectation of slight increase in car sales, as spending on launching electric vehicles across its model line-up peaks this year. The automaker said that fully-electric vehicle sales should rise significantly in 2024 after jumping 74% in 2023. “We are investing in the future of our company like never before,” the company’s finance chief Walter Mertl said in a statement.
Sales of fully-electric cars made up 15% last year and the company said sales were up by a “significant double-digit percentage” so far this year. The company said it expected overall deliveries of key brands BMW, MINI, and Rolls-Royce this year to be slightly higher than in the previous year. It said the operating profit margin in its core automotive division should be in a range of 8-10%, versus 9.8% in 2023.
The margin last year, reported last week, fell short of expectations due to higher costs. BMW also had to slash dividends as consolidation of its Chinese joint venture weighed on the bottom line. Further, the automaker avoided announcing an extension of its current share buyback plans, which “could provide a potential source of disappointment, amidst accelerated buyback programmes from other automakers”, Bernstein analyst Daniel Roeska wrote in a client note.
The premium automaker’s capital expenditure and spending on research and development to support its switch to fully-electric models should peak in 2024. Prices of used cars, which spiked in the wake of the pandemic because supply-chain shortages curtailed new car production, have come back down as automakers increase output. The German automaker said that meant its revenue from selling returned leased cars would fall this year versus last year.