BMW’s CFO, Walter Mertl, remains optimistic about the company’s prospects in China’s automobile market, despite the challenges posed by an ongoing price war in the electric vehicle (EV) sector and sluggish overall demand. Here’s a closer look at the key points from his recent statements:
Steady Growth in China
Mertl highlighted that BMW’s sales in China surged by 3.7% during the first half of the year, outpacing the broader auto market. This growth is seen as a positive sign, and BMW anticipates that the trend will persist.
Price War Impact: Importantly, Mertl noted that the price war predominantly affects the lower-priced segments of the auto market. BMW strategically avoids direct participation in this segment, thus safeguarding itself from the intense competition in the affordable EV sector.
Challenges in China’s Auto Market
China’s passenger vehicle sales have experienced a decline over the past few months. This drop can be attributed to factors like economic uncertainties and a housing market slowdown, which have led consumers to be more cautious about vehicle purchases.
BMW Competitive Pricing
The price reductions initiated by Tesla earlier in 2023 have had a cascading effect, with various brands in China, including General Motors and Volkswagen, following suit. This has created a competitive pricing environment in the Chinese EV market.
BMW has raised its sales outlook for 2023 and expects solid growth, defined as an increase ranging from 5% to 9.9%. This outlook reflects the company’s confidence in its ability to navigate the current market conditions successfully.
Impact of German EV Incentive Phase-Out
Mertl acknowledged that the phasing out of incentives for electric vehicles in Germany could lead to a temporary decline in demand. However, he expressed confidence that demand would stabilize after this transitional period.
Electric Vehicle Expansion
BMW is fully committed to expanding its presence in the electric vehicle segment. The company recently introduced its new electric platform, “Neue Klasse,” and has set ambitious targets for EV adoption. BMW aims to increase the share of EVs in its total vehicle sales to 15% in 2023 and 20% in 2024, up from approximately 9% in 2022. This strategic move aligns with BMW’s commitment to meeting stricter emissions regulations and responding to the growing demand for electric mobility.
BMW’s proactive approach to electric mobility and its ability to navigate the competitive landscape in China position the company to thrive in an evolving automotive market.
Tags: BMW China sales BMW sales outlook China automobile market EV price war Neue Klasse electric platform Walter Mertl interview