Financial Data and Key Metrics Changes - The company reported a decline in revenue and profit in Q3, primarily due to a loss of sales for about two weeks, which impacted the overall performance [5] - The expected auto margin for Q4 is projected to be between 5% and 7%, with a year-to-date target of 6% to 7% [6][14] - The strategic target for EBIT margin remains at 8% to 10% for the future [14] Business Line Data and Key Metrics Changes - The warranty provision remains at a similar level compared to the end of 2023, with ongoing accruals and payouts affecting the financials [20] - The company is focusing on efficiency and has a base ratio of 4% in its planning [23] Market Data and Key Metrics Changes - In the U.S. market, the company sold over 290,000 vehicles, marking a growth of nearly 7,000 units, with a significant increase of over 20% in October alone [10] - In Europe, the company sold 620,000 cars, reflecting a growth of almost 50% [23] Company Strategy and Development Direction - The company is committed to investing €1.7 billion in its U.S. manufacturing plant to electrify operations and enhance competitiveness [17] - A new fully electric plant has been opened in Hungary, which will strengthen cost competitiveness [24] - The company is adapting its powertrain mix in China, with 85% of volumes sold produced locally, and plans to increase this share with new electric models [28] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenges in the Chinese market but expressed confidence in the growth of BEVs, with a 15% market share [14] - The company is optimistic about its product portfolio and market conditions in the U.S., indicating a strong setup for future growth [10] Other Important Information - The company is facing pressures from warranty costs, with ongoing measures to reduce these expenses [20] - The impact of geopolitical factors on trade and tariffs was discussed, with management emphasizing the protective nature of their local production [17][41] Q&A Session Summary Question: Underlying profitability and margin expectations - Management confirmed that the underlying profitability level is expected to be in the range of 5% to 7% for Q4, with strategic targets aiming for 8% to 10% in the future [14] Question: North American manufacturing flexibility - The company highlighted its strong manufacturing footprint in the U.S. and the ability to produce a variety of models, providing a buffer against potential tariffs [9] Question: Warranty provisions and cost-cutting measures - Management indicated that warranty provisions are stable, with ongoing efforts to manage and reduce warranty costs [20] Question: Impact of trade tensions and vehicle import/export numbers - The company noted that 65% of U.S. sales are produced locally, which mitigates risks from trade tensions [17] Question: Strategy for the Chinese market - Management emphasized the flexibility in powertrain offerings and the growth of BEVs in China, despite overall market challenges [29] Question: Financial results and future expectations - The decline in Q3 was attributed to fair value derivative evaluations, with expectations for a reversal in Q4 as interest rates rise [37] Question: Capital returns and free cash flow - The company plans to maintain a high payout ratio of free cash flow, with ongoing share buyback programs [40]
BMW(BMWYY) - 2024 Q3 - Earnings Call Transcript