Release Date: August 01, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Stable pricing across the portfolio, with average revenue per unit maintaining at EUR51,000.
- Strong order intake lasting into Q4, indicating robust demand.
- Positive volume and mix, particularly with the ramp-up of the five series and MINI.
- Effective supply chain management, avoiding significant disruptions.
- Continued growth in electric vehicles, with a 50% increase in fully electric vehicle sales in Europe.
Negative Points
- Downward pricing trend in China, though recent stabilization is noted.
- Normalization of used car prices impacting revenue and profit margins.
- Challenges in maintaining CO2 emission targets, requiring significant adjustments in product mix.
- Potential financial impacts from new corporate sustainability reporting directives.
- Pressure on dealer transaction prices, particularly in China, requiring adjustments in volume targets.
Q & A Highlights
Q: Could you give us an update on pricing developments as we go into the second half, and how do these compare to your assessment of the market at the end of the first quarter?
A: Walter Mertl, Member of Management Board of Finance: Prices across our portfolio this year and '24 are expected to be on last year's level. In Q1, we ended up with EUR53,000 in average full year, and we are still running on EUR51,000. We see stabilization in China, with dealer prices stabilizing by 1.2% points in July compared to June. In the US, pricing momentum is good, and in Europe, we are stable.
Q: Could you provide more clarity on your expectations for volume mix price to be neutral for the full year, and comment on your flexibility measures in terms of production in your Chinese plants?
A: Oliver Zipse, Chairman of the Management Board: We expect CO2 emissions to be far below the official targets in 2024, helped by an additional mix of electric cars. Our product mix in Europe will help us achieve these targets.
A: Walter Mertl, Member of Management Board of Finance: We have a strong order intake lasting into Q4, with positive mix due to the availability of the five series and MINI ramping up. In China, we use flexible workers and adjust production shifts to manage costs effectively.
Q: Can you quantify the difference between transaction prices and your own revenue prices, and do you see any pockets where pricing is more pronounced?
A: Walter Mertl, Member of Management Board of Finance: The bridge side is an absolute term rather than average per unit. Off-lease volumes and less profit on residual value side impact revenue. GKL models are operating positively, and the five series will have a full effect in the second half. We are running cost measures, especially on manufacturing costs.
Q: What are the biggest challenges you're facing with regards to the energy transition, and can you confirm that the pushback on the 2035 regulation is not about lowering carbon emission targets?
A: Oliver Zipse, Chairman of the Management Board: The challenge is to connect product offering, market demand, and infrastructure. We are not pushing back on CO2 reduction but advocating for a technology-neutral approach. E-fuels and hydrogen are essential for reducing CO2 emissions.
Q: Are you expecting any financial impacts from the corporate sustainability reporting directive (CSRD), and will there be a link between CSRD and the financial statements in the annual report?
A: Walter Mertl, Member of Management Board of Finance: All relevant topics are reflected in our accounts. Administrative costs are included, and we advocate for standardized rules based on ISPs. There is no significant financial impact expected from CSRD.
Q: Can you share more about your confidence in containing the contraction in profit before tax to 5%, and give an indication for automotive margin in the second half?
A: Walter Mertl, Member of Management Board of Finance: We expect to run on the lower end of our corridor. Positive results in other entities, supported by fair value impacts, will help contain the contraction in profit before tax.
Q: How do you feel about the production versus retail sales ratio going into the second half, and what are your thoughts on the volume side in China for the second half?
A: Oliver Zipse, Chairman of the Management Board: We are right on target with our systems. Increased inventory is due to ramping up of Mini and X3 production. We expect lower inventory at the end of the year.
A: Walter Mertl, Member of Management Board of Finance: We expect full availability of the five series and MINI in China in the second half. Dealer transaction prices are stabilizing, and we hope this trend continues.
Q: Can you explain the dividend payment to non-controlling interests shown in your half-year report?
A: Walter Mertl, Member of Management Board of Finance: The majority of the EUR1.013 billion dividend payment to non-controlling interests is to Brilliance Automotive (BBA).
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
