BMW says worsening Chinese market could hit forecast

Tue Aug 4, 2015 9:28am EDT
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By Edward Taylor

FRANKFURT (Reuters) - BMW (BMWG.DE: Quote), the world's biggest luxury carmaker, warned on Tuesday that its financial forecasts for this year could be at risk from any further deterioration in the Chinese market, where its sales have begun to fall for the first time in a decade.

BMW has been hit by a slowing Chinese economy where cut-throat competition leaves its ageing product range increasingly exposed.

The German company, which had already said in May that growth in China would be "less dynamic", said it still expected to break records again on group sales and pretax profit this year but the challenges in China could affect "the scale of the increase" on last year's pretax profit of 8.707 billion euros.

On Tuesday it also reported a 3 percent slide in its second-quarter operating profit as it sold a higher proportion of low-margin cars and invested in new models.

Second-quarter sales of BMW, Mini and Rolls-Royce vehicles actually rose 2.3 percent in China, the world's biggest car market, but fell in May and June after a decade of growth and the group said it was facing fierce competition in the Chinese market and elsewhere.

BMW said it had already throttled back production of its locally made 3-series cars. Last month Brilliance China Automotive (1114.HK: Quote), which assembles BMWs in China, issued a profit warning, citing slowing sales in the world's biggest car market.

"If conditions on the Chinese market become more challenging we cannot rule out a possible effect on the BMW Group's outlook," the Munich-based carmaker said in its quarterly report.

"It is difficult to make an estimation about how the market will develop. We expect continued growth," Finance Chief Friedrich Eichiner said in a call with reporters to discuss second-quarter results.   Continued...

A BMW emblem is pictured at the 2015 New York International Auto Show in New York City, April 2, 2015. REUTERS/Eric Thayer