BMW has confirmed that its profit margin for 2021 has increased thanks to the higher prices it has applied to its products. This change in pricing was to outweigh the critical semiconductor crisis that is currently plaguing manufacturers across the globe.
As Automotive News Europe reports, the Bavarian manufacturer sees earnings before interest and taxes of between 9,5 and 10,5 per cent on sales which is up from a previous view of 7 to 9 per cent.
“Whilst the semiconductor supply restrictions are expected to further impact production and deliveries, the continuing positive pricing effects for both new and pre-owned vehicles will overcompensate these negative sales volume effects,” the Munich-based company said.
With this, earnings before tax for BMW is expected to rise “significantly” as added free cash flow is seen at close to €6,5 billion (approximately R113 billion).
Semiconductor shortages have left quite a dent in the motoring industry since the beginning of the hard lockdown measurements implemented to soften the blow of the COVID-19 pandemic. This has prompted companies such as Renault to Toyota to indicate longer-term hits to output. Increased pricing of products has allowed some brands to offset losses.
In August, Daimler attributed higher than expected earnings in its Mercedes-Benz division thanks to the adjustment of its pricing. BMW also raised its profit forecast in August after strong quarterly results, but warned at the time that chip shortages could plague the second half of the year.
BMW’s strong relations with its suppliers mean that it was less affected by the shortages than other manufacturers, some of whom have halted production at some of their key plants.