As the electric rollout continues, BMW anticipates greater margins and deliveries in 2023

BMW on Wednesday set the target of slightly increasing its automotive segment margins this year and increasing the number of vehicles delivered as it pushes ahead with the rollout of its electric fleet across Europe.

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During its 2023 financial year, the company is planning to earn a margin of between eight percent and ten percent for its automotive products, with deliveries expected to increase by approximately 5% from 2022 and “selling prices to remain stable”. In its opinion, the used car market will be normalized this year because of the increase in the availability of new cars.”

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Following the announcement, BMW shares rose by 1.07% at 8:20 a.m. London time.

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“The combination of the high level of flexibility and excellent operational performance has proven to be an effective combination that has ensured the BMW Group's success, even in times of headwind, and enables us to take advantage of opportunities for profitable growth,” commented Oliver Zipse, chair of the board of management of BMW AG in a press release.

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Due to global semiconductor shortages and supply chain disruptions, BMW has been facing the same challenges as its rivals, making it challenging for it to fulfill its book order orders as well.

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There was a confirmation of the full-year results for 2022 reported last week by the company, including a 16.3% EBIT margin for the company's automotive segment, which had an 8.6% margin last year. A total of 11.1 billion euros was posted by the company as its automative cash flow.

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As a result of the proposed dividend, the company proposed a payout of 8.50 euros per common stake share, compared to a payout of 5.80 euros per common stake share in the previous year.

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“I think it relates well to what we said a couple of years ago regarding our ability to pick and choose specific trends, segments, or regions in the world, and I think this fits logically into what we said a couple of years ago," Zipse said to Trade Algo. “The plan has been implemented, and now we are in the process of executing it. In fact, it looks as if the plan we are executing here is quite successful in terms of the revenue side, as well as the market share side."

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BMW's strategy will continue to prioritize profitability, downplaying the effects of soaring inflation rates on consumer demand.

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“The question of whether inflation really has an impact on the market is a matter of whether you are able to have pricing power in the market. I would be cautiously optimistic about the year, with that global approach we have here, and I think we will have a slight increase in volume in total as a result of it."

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Walter Mertl will take over as the company's new chief financial officer in May following Nicolas Peter's retirement.

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BMW's results come on the heels of another spate of optimistic announcements from the auto industry earlier in the week, including Porsche's ambitious growth forecast after record 2022 earnings and Volkswagen's multi-billion dollar investment plan for the next five years.

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Green push

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BMW expects that the main growth drivers of its business in the coming year will be its premium models and fully battery-electric vehicles (BEV).

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“Considering the market conditions in the second half of the decade, the development of raw material prices and availability, and the pace at which a comprehensive charging infrastructure is constructed,” the BMW Group expects to reach well over 50% of the BEV market by 2030 based on what the company announced earlier in the year, indicating that its BEV share would reach 15% in 2023.

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It is estimated that BMW will deliver more than 10 million fully electric vehicles by 2030, with 2 million of them projected to be delivered by 2025. The carmaker's MINI brand will debut the first electric vehicle on the market this year, following the launch of the Rolls-Royce range's first fully electric vehicle, the Rolls-Royce Spectre, in 2022, a model that will reach customers in 2023, as well as the Rolls-Royce TLX in 2023.

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As part of its efforts to transition toward electric vehicles, the automaker announced last month that it plans to invest $1.7 billion in its U.S. operations to build such vehicles and batteries. Hydrogen vehicles were introduced as part of a pilot program earlier this year.