Equities

BMW EV Sales Surge 22%, Leads Mercedes, Audi in Q2

BMW's EV deliveries surge 22% to 107,933 units, while Mercedes and Audi struggle with declines and flat sales.

By Bill Bullington

7/10, 07:48 EDT
article-main-img

Key Takeaway

  • BMW's EV deliveries surged 22% to 107,933 units in Q2, outpacing Mercedes-Benz and Audi, which saw declines or flat sales.
  • Mercedes-Benz shares fell 3.6% after a downgrade from Bank of America due to an ageing model lineup and weaker demand.
  • Volkswagen lowered its margin outlook to a high of 7%, citing €2.6 billion in additional expenses and potential plant closures.

BMW's EV Sales Surge

BMW AG has extended its lead over German rivals in the electric vehicle (EV) market, reporting a significant increase in deliveries for the second quarter. The company announced that its battery-powered models, including the i4 and iX1, saw a 22% surge in deliveries, reaching 107,933 units through June compared to the same period last year. BMW attributed this growth to its attractive product portfolio, which has helped it navigate a challenging market environment.

In contrast, Mercedes-Benz Group AG reported a 25% decline in wholesale deliveries of passenger EVs, totaling just 45,800 units. The Stuttgart-based carmaker cited weaker demand in major economies and heavy discounts in the EV market as key factors for the decline. Audi, another German luxury carmaker, saw its EV deliveries remain flat at 41,000 units in the second quarter. Parent company Volkswagen AG also reported a 15% decline in full-electric sales in Europe and the US for the first half of the year, although EV demand in China rose by 45% during the same period.

BMW's success in the EV market is notable given the broader trend in Europe, where sales of battery-powered cars have either flattened or diminished as a share of overall deliveries. This shift comes after years of growth, as governments have started to reduce or eliminate financial incentives for EV purchases.

Mercedes Faces Downgrade

Mercedes-Benz Group AG received its first downgrade of the year from Bank of America Corp., with analyst Horst Schneider predicting that the ageing lineup of auto models will negatively impact sales. Mercedes shares dropped as much as 3.6% following the downgrade, trading around €63, just above Schneider’s €60 price target. Schneider noted that the average age of Mercedes' fleet is expected to rise to 4.8 years by 2026, compared to Volkswagen's declining average fleet age.

"Mercedes, by 2026, will have the oldest model line-up amongst the three German premium original equipment manufacturers, implying the company may have to support its volumes via higher price discounts," Schneider said.

Despite the downgrade, the majority of analysts tracked by Bloomberg remain bullish on Mercedes, with 20 still rating it as a buy. However, caution is growing. Citigroup’s Harald Hendrikse, who has a neutral rating on Mercedes, flagged risks around Chinese demand and the need for "higher-for-longer" spending on internal combustion engine vehicles. Hendrikse reduced his price target on the stock to €68 from €72, citing few positive catalysts. Meanwhile, HSBC’s Michael Tyndall still rates Mercedes a buy but warned that it’s too early to call the trough for European autos, noting that 2024 is a transition year for Mercedes with limited launch momentum.

Volkswagen Lowers Margin Outlook

Volkswagen AG has lowered its margin outlook for the year, citing costs related to a potential closure of its Audi plant in Belgium and other unplanned expenses. The company reduced its guidance to a high of 7%, down from a previously predicted high of 7.5%. The additional expenses, which amounted to €2.6 billion ($2.8 billion), weighed on its second-quarter results.

Audi's management has been in discussions with the Belgian government about the future of its Brussels factory, which currently has no additional models planned beyond the Q8 e-tron. The company stated in March that a decision would be made by the end of the year. The potential closure of the plant is part of a broader trend among carmakers, including VW and Mercedes-Benz, to rethink their EV plans amid poor sales and reduced government incentives.

In addition to the potential plant closure, Volkswagen cited exchange rate losses, expenses related to the planned closure of the gas turbine business of MAN Energy Solutions, and provisions for termination agreements to cut personnel as contributing factors to the lowered margin outlook. Separately, Porsche also cut its profit outlook after tax, citing equity investment in Volkswagen.

Management Quotes

  • BMW AG:

    "BMW said its attractive product portfolio offset a challenging market."

  • Mercedes-Benz Group AG:

    "The Stuttgart-based carmaker cited weaker demand in major economies and heavy discounts in the EV market."