BMW on Wednesday warned that the coronavirus pandemic will harm the auto industry “for quite some time to come.”
The automaker reduced its profitability forecast for earnings to zero percent to 3 percent from 2 percent to 4 percent after a drop in demand during the first quarter as the world battled the coronavirus and dealerships shut down, according to a release.
BMW reported in its quarterly statement that net profit dropped 2.4 percent to $620 million during the first three months of the year, a decrease from about $635 million in 2019. But the year before, BMW was charged approximately $1.9 billion in a European Union trust case.
The company expects sales this year to be much lower than last year’s, adding that a quick recovery “is unlikely.” BMW predicts the “highest negative impact” will occur in the second quarter, as governments around the world are just beginning to reopen.
During the first quarter, vehicles with higher profit margins overshadowed other sales, according to the quarterly statements.
In a statement, the BMW Group said it is “well prepared to react swiftly and decisively” during the pandemic.
“This approach is all the more important given that the BMW Group expects the consequences of the corona pandemic to constrain the operations of the entire automotive industry for quite some time to come,” the statement read.
The automaker also said in the statement it will reduce investments to keep cash and extend its $12.9 billion cost-savings plan. Chief Financial Officer Nicolas Peter said in a conference call that plans for a plant in Hungary would be delayed for a year, and other projects “will be carefully reconsidered.”