BMW expects consistent 2024 profits as electric spending peaks.

BMW said on Thursday that it aimed for automotive profit margins in 2024 that were similar to last year, and that it anticipated a little uptick in sales of cars due to the fact that spending on introducing electric vehicles across all of its models reaches a top this year.

"We are investing in the future of our company like never before," stated Walter Mertl, chief financial officer. Early trading saw a 1% decline in BMW shares.

Following a 74% increase in 2023, the premium German carmaker predicted a further surge in sales of fully electric vehicles in 2024. Sales of fully electric vehicles increased by a "significant double-digit percentage" so far this year, from 15% of total sales last year.

The German automaker predicted marginally higher total deliveries of its three flagship brands—BMW, MINI, and Rolls-Royce—this year compared to 2023. Compared to 9.8% in 2023, it predicted an operating profit margin for its main automotive sector of 8-10%.

Last week, we learned that the 2023 margin was lower than anticipated, mainly because of the higher costs. Due to the negative impact on profits caused by the consolidation of BMW's Chinese joint venture, the company had to reduce dividends as well.

Could provide a potential source of disappointment, amidst accelerated buyback programs from other automakers," Bernstein analyst Daniel Roeska wrote in a client note on the automaker's failure to announce an extension of its current share buyback plans.

The transition to fully electric cars is expected to be supported by a peak in capital investment and research and development spending in 2024, according to BMW.

As manufacturers ramp up production, used car prices have fallen again, after rising sharply in the aftermath of the pandemic due to supply-chain problems that reduced new car manufacturing. BMW predicted a decline in revenue from the sale of repossessed leased vehicles this year compared to 2023 as a result.

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