German based luxurious car manufacturer Bayerische Motoren Werke AG (BMW) has announced withdrawal from earlier released financial guidance for the year further adding effects caused by coronavirus pandemic will affect the company’s performance for the entire year.
“The BMW Group still expects the spread of the coronavirus and the necessary containment measures to seriously dampen demand across all major markets over the entire year 2020,” said BMW.
BMW claims in the first quarter of the year orders and deliveries of cars have slumped heavily more so passenger cars, leaving the company with very few options including lowering its financial projections for the year.
The automaker has readjusted its full-year automotive earnings before interest and taxes (EBIT) margin to 0% to 3%, dismissing earlier estimate on the same of a 2% to 4% range. BMW believes restricted movements worldwide are the major reason for low sales.
The automaker managed to post increased profit of 1.38 billion euros ($1.50 billion) in the first quarter of the year ended March 31. This profit was 133% of what the 589 million euros the company had posted as profit in a similar quarter last year.
Despite being profitable in the quarter, passenger car deliveries by BMW declined by 20.6% to 477,111 cars in the first quarter.
On the other side, BMW’s competitor electric vehicle maker Tesla Inc. (TSLA) registered an increase of 40% of car deliveries in the first quarter increasing gross margin of the company by 25% in the quarter.
There seem to be a shift by consumers who are now buying vehicles with less emissions and more environmental friendly thanks to tough and stringent measures against emissions.
Last year, BMW announced taking a shift to producing more of hybrid petrol-electric and pure electric vehicles, a move which caused sales of BMW’s X series spike by 21% in 2019.
