BMW Sees Profit Margin as Low as 1% as China Demand Weakens

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Transcript

00:00Danny, we're down. We're down hard. We're off our lows. Investors are clearly concerned.

00:06Is BMW basically signalling that it can't make China work here? The Chinese market is

00:12unbelievably competitive. Is this a signal that basically it is not going to be able to deliver

00:17on the promises that were made regarding that market? I think there are big questions for

00:23BMW in particular in the China market. The longer run, given the competitive backdrop and the

00:29pressures that all automakers, including now the Chinese, but foreign makers at large,

00:34there are questions. But the fact that the stock fell to almost its lowest in five and a half years

00:40and the worries that it brings to investors and to analysts who are reappraising this stock,

00:45who thought that BMW, frankly, was in a much better position than your Mercedes and your Porsches,

00:51that is now not the case, according to analysts who have seen this stock being pummeled. And the

00:57fact that the shares dropped by almost 12% at one point today in Germany. So the fact that the

01:04BMW is looking at a margin of around 1% from as high as 6% and the fact that

01:10the guidance only a

01:12month and a half ago was then held steady. But under new CEO, Milan Nankovic, he is really clearing the

01:19decks here to try and get a better sense of what is going on and to try and give some

01:24kind of base

01:25for investors and shareholders, especially as he starts his new tenure, that this is a difficult

01:30situation for BMW to navigate, particularly because of the China market, because of the war.

01:35And now that he's looking to deepen cost cuts, we've seen efficiency savings,

01:40cuts to R&D and investments. But now Nelankovic is looking to deepen that and go for more structural

01:47cuts and bigger efficiency savings. The question really is, how far would he go? And will that

01:52include job cuts? So it remains to be seen just what detail there is, but definitely look to go

01:58harder and faster given sales will not grow and will in fact fall.