BMW Looses Out In First Quarter of 2016

The first financial quarter of 2016 is over and that allows us to look at just how well the major automotive companies have performed. In general, the market has been advancing steadily with only the companies that make up the Volkswagen group being badly affected. But, BMW, the German luxury performance outfit have also not performed well either.

The Bavarian company have been affected by many exterior influences which have consequently led to their poor financial performance. Revenue fell by 8.6 percent, earnings before interest and tax fell 2.5 percent from €2.52 billion to €2.42 billion and BMW shares were down 3.2 percent at €78.54. Well, at least that is all of the statistics dealt with, but it still doesn’t look too good for BMW at the start of 2016.

The amount of vehicles produced and sold across the BMW group however, saw an increase of 5.9 percent. The main reason for why this increase did not actually affect BMW’s profits is because the X1 crossover SUV, which has proved to be a massive hit in the Chinese market, has only been unveiled. Furthermore, the competition from rival companies such as Audi and Mercedes-Benz, have forced BMW to decrease the prices of their vehicles in order to compete. This may even be the reason for why sales increased whilst profits remained low.

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It has however been argued that the main reason behind the loss of BMW’s profits can actually be targeted to their huge expenditure in the future of automotive technology. The German company have been investing heavily in the future of the electric and autonomous car. This may be one reason for why the company have seen a lack of profit and it does make sense considering that BMW’s autonomous project is advancing quickly, they are currently winning in the battery range race and, the i8 supercar is soon to undergo a facelift.

The sudden change in the desirability for a cars model and a company’s ability to adapt is what will drive up profits. BMW are aware of this and with the extended platform X1 on sale in China now, we are sure that they will turn this poor start to 2016 around very quickly.