BMW’s Car-Crash Quarter

BMW’s Car-Crash Quarter

over 3 years ago1 min

Mentioned in story

BMW doesn’t want to alarm anyone, but the German automaker reported a weaker-than-expected second quarter – and its first quarterly loss in over ten years – on Wednesday.

What does this mean?

BMW’s quarterly loss was almost inevitable: showrooms were forced to shut, consumers to stay home, and businesses to delay big purchases – like car fleets – in an effort to save what money they could. But that loss was still worse than investors had predicted, and brought with it more bad news: BMW admitted its profit this year would be significantly below last year’s total, and that its “free cash flow” – that is, the amount left over after making the necessary reinvestments into the business – would be zilch. And that might explain why its stock fell 5% on Wednesday.

Why should I care?

It’s not just BMW that’s been T-boned by coronavirus: Volkswagen, the world’s biggest carmaker, recently reported a loss of almost $3 billion and cut its dividend, while Mercedes-maker Daimler said it’d need to cut 20,000 jobs. Even the excitement surrounding electric vehicles (EVs) might now be waning: EV-maker and stock market newbie Nikola saw its stock fall 20% after its earnings report this week – and backers of investor-favorite Tesla could be getting nervous too.

Continental – one of the world’s biggest suppliers of auto parts – also revealed a quarterly loss on Wednesday, going to show the knock-on effect of reduced car sales. The German company is expecting 20% less demand for parts this quarter versus a year ago, perhaps because of all the unsold cars sellers need to make their way through first. And with that, Continental’s name was added to the ever-growing list of companies choosing not to forecast their future earnings…



All the daily investing news and insights you need in one subscription.

Disclaimer: These articles are provided for information purposes only. Occasionally, an opinion about whether to buy or sell a specific investment may be provided. The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment advisor.

/3 Your free quarterly content is about to expire. Uncover the biggest trends and opportunities. Subscribe now for 50%. Cancel anytime.

© Finimize Ltd. 2023. 10328011. 280 Bishopsgate, London, EC2M 4AG