BMW says wors­en­ing Chi­nese mar­ket could hit forecast

The Pak Banker - - BUSINESS -

FRANK­FURT: BMW (BMWG.DE), 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), which as­sem­bles BMWs in China, is­sued a profit warn­ing, cit­ing slow­ing sales in the world's big­gest car mar­ket.

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