Automotive industry: BMW's profits are shrinking - job cuts are expanding

Munich. BMW is making less and less profit and wants to cut jobs more and more quickly. In the third quarter, the group earned 1.45 billion euros after taxes, he said. That was almost 15 percent less than a year ago. In addition, the prospects for the current fourth quarter are poor after a profit warning on Tuesday evening. Among other things, the costs of job cuts are a burden.

The key driver for the decline in the third quarter is the poor business in China. Like all German manufacturers, BMW is suffering from the fact that the world's most important automobile market is shrinking and at the same time is being shaken by increasing competition and fierce price wars.

BMW also lost around a quarter of its sales there. They were able to offset at least part of the decline through increases in Europe and the USA, so that sales only fell by 6.3 percent. Sales fell slightly by 5.8 percent to 30.5 billion euros.

BMW had already issued a profit warning on the eve of the quarterly figures. It was the second in the current year and the third within 13 months. In the automotive business, the group now expects earnings to be billions of euros lower than before. Of all things, the success of the austerity program is to blame, the costs of which - together with other effects - are putting pressure on profitability.

The program, which was announced in the summer, started at the beginning of October and was closed again after less than three weeks because there was surprisingly great interest among employees in leaving the company for a payment that was often well into the six-figure range.

“Exactly the right groups of people took part in the dismantling program,” says CEO Milan Nedeljkovic. This gives BMW the opportunity to “do the conversion accordingly quickly”. In addition, you can expand it beyond what you have planned.

In the summer, it was heard from corporate circles that global job losses could be around 8,000 - with a focus on Germany and then again on Munich. Management never confirmed this number. Even now, Nedeljkovic only said that the renovation would be planned on a short-term basis. "We go as far as our feet take us. And whatever makes sense for us. The current job cuts program has been completed, but the issue continues.

Further costs arise because the Munich-based company is phasing out older models earlier than originally planned. They cite the good start of the new class as the reason for this.

CFO Walter Mertl explains the burdens as an investment in the future. "Speed is a success factor in our planned realignment. That's why we're intensifying measures for more efficiency and leaner structures this year," he says. “We want to use this to strengthen our future margins.” The faster the job cuts are implemented, the sooner savings will be achieved.

BMW has also lowered its sales expectations. The group is now assuming a moderate decline - that corresponds to 5 to 9.9 percent. So far, the outlook here had been for a slight decline - that corresponds to 1 to 4.9 percent.

BMW left its forecast for profit before taxes untouched - although the group has been expecting a significant decline since the first profit warning in early summer. That would be more than 15 percent.