BMW stated its pretax earnings and vehicle deliveries will drop significantly this year as coronavirus spreads, and combined with higher analysis and development spending. It will also lower the revenue margin in its automotive segment.
The Munich-based car manufacturer stated it’s preparing to halt manufacturing at its factories in Europe until April 19, responding to dented demand and as a manner to help scale back the risk of contagion. The factory shutdown will begin at the end of the week.
BMW stated the current ambiguity concerning the global pandemic and effects of coronavirus makes it difficult to provide an accurate 2020 outlook. Still, it anticipated lower delivery volumes in all major markets this year.
Based mostly on the latest estimation, the EBIT margin of the Automotive segment is therefore anticipated to lie within a level between 2% and 4%, it stated.
BMW said it’ll invest 30 billion euros on research and development until 2025 so it can bring next-technology electric and hybrid autos to market.
Earlier this month, BMW said higher research and development (R&D) spending and production costs had caused earnings before interest and tax (EBIT) to plunge 17% to 7.411 billion euros ($8.26 billion) last year.
As a result, the operating margin in its automotive segment dropped to 4.9% in 2019, from 7.2% the year earlier.