German automotive giant BMW has witnessed a staggering 79.4 per cent decline in third-quarter profits, primarily driven by challenges in its braking systems and a significant downturn in Chinese consumer demand. The manufacturer’s profit before tax plummeted from €4.2 billion to €838 million in the quarter ending September 30.
The decline extends beyond profits, with group revenues experiencing a 15.7 per cent reduction from €38.5 billion to €32.4 billion during the same period. Despite maintaining a strong position in Europe and achieving considerable growth in the region over the first nine months of its financial year, the Chinese market’s ongoing volatility has proven particularly challenging.
The situation in China remains complex, with government stimulus measures aimed at addressing real estate sector difficulties showing limited impact. This weakness in the Chinese economy has created ripple effects, affecting other major Western corporations including Smith & Nephew, BP, Diageo and AstraZeneca.
BMW’s electric vehicle segment shows promise, with deliveries across its Mini, Rolls-Royce, and BMW brands increasing by 18.1 per cent to 294,052 units in the first nine months. However, total car sales suffered due to delivery halts caused by integrated brake system component issues, resulting in a 4.5 per cent decline to 1,754,157 units.
The impact on investor confidence has been substantial, with BMW’s shares declining by €4.78, or 6.6 per cent, closing at €67.84 in Germany. The year-to-date performance shows an even more concerning trend, with shares down 33 per cent, reflecting broader market concerns about the automotive sector’s challenges in key markets.
The company’s outlook remains cautious as it navigates geopolitical developments, trade conflicts, and persistent challenges in the Chinese market, where the ongoing real estate crisis and diminishing domestic demand continue to hamper growth prospects.
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