Losses at BMW Group’s automotive division dragged the company into the red for the first time in more than a decade, rounding out a dismal quarter for European automakers hit by the coronavirus pandemic.
BMW lost 666 million euros ($787 million) before interest and taxes between April and June, its first quarterly deficit since the financial crisis in 2009, down from a 2.2 billion euro profit in the same period in 2019, the company said Wednesday.
The earnings before interest and taxes (EBIT) margin in the company's automotive segment was pushed to a negative 10 percent in the quarter, slumping from a gain of 6.5 percent in the second quarter last year, as BMW ramped up expensive electric car technology investments and deliveries of new cars fell by 25 percent in the quarter.
BMW is the final German vehicle manufacturer to report after what has been a difficult quarter for automakers. Volkswagen Group lost 2.4 billion euros and cut its dividend, while Daimler argued that it had weathered the worst but still needs to slash tens of thousands of jobs.
Despite the difficult quarter, BMW said it expected to post an operating profit for the full year.
"We are now looking ahead to the second six-month period with cautious optimism and continue to target an EBIT margin between 0 percent and 3 percent for the automotive segment in 2020," CEO Oliver Zipse said in a statement.
In May, the automaker warned it would post a second quarter loss and slashed its outlook, forecasting an automotive EBIT margin of 0 percent to 3 percent this year, versus a forecast of 2 percent to 4 percent before the pandemic.
Sales have begun to recover in some markets, including in China, leading BMW to expect its core business to return a profit, but the rebound will not be enough to make up the shortfall of sales lost to the pandemic.
BMW will start producing the iX3 electric crossover this year in China, where it will also be first sold to customers.
Deliveries of electric and hybrid cars rose in the quarter as countries including Germany and France raised subsidies for the vehicles. BMW said it expects further growth from that sector in the second half of the year.