BERLIN, July 30 - German premium automaker BMW said it is preparing for intensified competition and will reduce headcount after reporting a significant fall in second-quarter pre-tax earnings.
BMW recorded quarterly pre-tax earnings of €1.7 billion, a drop of more than one-third, according to company figures. That result compared with a company-provided analysts' consensus of €1.6 billion.
The group's core automotive operating margin contracted to 2.3% for the quarter, a figure that exceeded the analysts' forecast of 2.2% but was down sharply from 5.4% in the same period a year earlier. Management linked the weaker profitability to a mix of geopolitical and market pressures.
"The automotive industry is faced with rapidly escalating challenges - intense global competition, increasing regional regulatory requirements and the implications of geopolitical conflicts will shape our business model in the years ahead," CEO Milan Nedeljkovic said, outlining the environment the company is navigating.
BMW confirmed its full-year guidance, keeping a target operating margin for cars in the range of 1% to 3%. The reaffirmation follows a surprise profit warning in June that prompted talks with employees about cost reductions.
As part of that effort, the company now intends to cut 8,000 jobs under a voluntary redundancy program, a person familiar with the plans said on Wednesday.
Finance chief Walter Mertl emphasized competitive pressure, saying: "Competition in the global automotive market has sharpened noticeably." He pointed to market dynamics that are squeezing margins for foreign carmakers.
BMW also cited specific regional headwinds. A downturn in the Chinese car market has intensified the strain on overseas manufacturers operating there. At the same time, Chinese automakers that are restricted from selling in the U.S. are increasingly targeting Europe to expand, adding to competitive pressure.
(Currency reference: $1 = 0.8733 euros)
Context note - BMW's second-quarter figures show a company maintaining guidance while taking immediate steps to adjust costs and capacity in response to regional market weakness and broader competitive shifts.