BMW remains on course to meet its profit targets for 2021 despite rising raw material costs, though the global chip shortage will worsen and may hit production in the second quarter, the German carmaker said on Friday.
Most of the auto
industry has been hit by a global semiconductor chip shortage, forcing many
assembly plants to shut, driving down inventories and pushing up prices for
both new and used vehicles.
"We cannot assume that we will emerge from the second
quarter unscathed," Chief Executive Officer Oliver Zipse said.
Zipse said, however, that he did not expect the shortage to
have a major impact on production and the company would respond by prioritising
production of cars with higher profit margins.
BMW said sales of its electrified vehicles more than doubled
in the first quarter, when it also benefited from higher prices and strong
demand in China, where sales almost doubled in the first quarter from last
year.
The carmaker said it expected to have 2 million
fully-electric cars on the road by 2025.
BMW has so far largely steered clear of the semiconductor
chip shortage battering rivals such as Europe's biggest carmaker Volkswagen.
Volkswagen boss Herbert Diess said on Thursday that it was
in "crisis mode" over the chip shortage and it would hit profits in
the second quarter, while Ford said last week that the lack of chips could
halve its second-quarter vehicle production.
BMW is known for its strong relations with suppliers and has
been working with them to avoid disruptions. Aside from temporary shutdowns of
MINI production in the United Kingdom and at a plant in Germany, the carmaker
has not been affected.
GREEN CARS
Chief Financial Officer Nicolas Peter also said during a
conference call that BMW expected raw material prices to rise, especially for
rhodium and palladium and steel.
BMW had already reported a 370 percent jump in pre-tax
profit as it bounced back more strongly than expected from a pandemic-ravaged
first quarter last year.
Rebounding demand from consumers in China in the second half
of last year helped BMW and its German rivals Volkswagen and Daimler post solid
profits for 2020 despite the coronavirus pandemic.
BMW reported solid first-quarter growth in other regions
too, including a 17.4 percent jump in sales in North America, driven by strong
demand from US drivers.
The German carmaker said its first-quarter results also
received a boost from the sale of previously leased vehicles, in particular in
the US market.
BMW said it expected the pre-tax margin for its core autos
business to come in at the upper end of its previous forecast of between 6
percent and 8 percent.
As part of its drive to use more environmentally sustainable
raw materials, BMW said it would source half of the aluminium used at its
foundry in Bavaria from Emirates Global Aluminium, which makes the metal using
solar power.
"Our ambition is clear: The greenest electric car will
be a BMW," CEO Zipse told a conference call.
© Reuters
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