BMW AG Chinese Partner Predicts Profit Losses for the First Half of the Year
BMW AG joint venture partner in China is expecting a first half profit falling 40 percent as the demand for premium cars is slowing down in the world’s largest auto market. Brilliance China Automotive Holdings Ltd. has dropped 9.4 percent in the Hong Kong trading which warned on higher expenses to the stock exchange as the Hang Seng Index benchmark slid 0.4 percent.
Profit warnings are the signs that demand for luxury cars in China is rapidly declining amid the slowdown in economic growth and the volatility of the stock market. This prompted BMW to extended financial assistance and to cut production in lowering excess inventory as dealers are complaining of mounting losses. Based on dealer checks and recent volatility in the A-share market led to some cancellation of vehicle orders hitting the premium segment more than the mass market brands.
With declining prices, high dealer subsidies and the costs of introducing new models added to the costs in the first half of the year and BMW remains confident with the Chinese market even with the projected decline in profit by their joint venture partner. According to BMW mid and long term conditions and prospects for the Chinese car market is very attractive including the low rate of car ownership, strong market position and expanding middle class.