BMW Group posts strongest profits in 106-year history
Prioritisation of high-end vehicles helps German giant mitigate impact of supply-chain crisis
That’s despite a 14.2% year-on-year downturn in deliveries from its three automotive brands – BMW, Mini and Rolls-Royce – in the fourth quarter, which it has attributed chiefly to the shortage of semiconductor chips.
The BMW Group cites a higher proportion of high-revenue vehicles as a driving factor in the growth. Like many manufacturers, it prioritised the production of these more lucrative models in light of the chip shortage restricting its output.
Other factors in the profit boost include an improved product mix and modified pricing structures.
Reduced employee numbers (down 1.5%) and changes to Germany’s pension system also drove a reduction in cost of sales “in the high three-digit-million Euro range”.
BMW says it saved around €1bn (£0.84bn) it had set aside for antitrust proceedings brought by the European Commission with regard to allegations that it was using emissions defeat devices, which were dropped in the second quarter of the year.
The company’s Financial Services division contributed a healthy proportion of the profits, boosting its revenues 9.4% to €3.2bn (£2.69bn) in light of higher average prices for end-of-lease used cars returning to BMW dealers.
BMW Group chairman Oliver Zipse hailed 2021’s results as “clear evidence that successful transformation bears fruit”, adding that the company has “the right products at the right time”.
As well as increasing its overall vehicle sales, BMW reported a 13% increase in sales of electrified vehicles, of which it sold 328,314 last year – a 70.4% year-on-year increase.
Currently, the BMW Group sells five pure-EVs across the BMW and Mini brands. The decade-old BMW i3 will bow out later this year, but the firm will introduce a new i7 electric saloon and iX1 crossover in the coming months.
Investment in the development new EVs accounts for the bulk of BMW’s research costs. The company said its €6.3bn (£5.3bn) of its R&D spend last year went towards “new vehicle architectures and toolkits in connection with the electro-offensive”. A proportion also went on digital product development and automated driving software.