BMW Heading for a Bumpy Ride?

Brexit will cast a cloud over BMW second-quarter results when it reports on August 2.

While the group is expected to report a 2% rise in second-quarter pre-tax profits to €2.63 from €2.55 the previous year and a rise in revenues to €24.55 billion from €23.93 billion, the estimates for the company going forward aren’t as great.

Analysts at Deutsche Bank believe that BMW will be the car maker most impacted by Britain’s decision to leave the UK.

BMW generates 11% of sales in the UK and produces around 250,000 cars per year. It will be interesting to see what noises BMW make about the future. Before its results in March it warned that its workforce could could be affected by a pro-leave vote.

BMW shares fell nearly 8% on the day of the UK’s vote to leave the EU, although since the Monday after the Brexit vote shares have popped somewhat, rising 14%. But this year, shares are still down nearly 20% – very similarly to Mercedes-maker Daimler, which is down 20% too.

Regardless of the Brexit worries, BMW – which celebrated its 100th birthday this year – said that it had its “best-ever” sales figures in May and June, and is focusing on 5% growth for the year.

The headwinds that will be seen will come from the European and US markets, believes Deutsche bank analyst Geelan Toulemonde.

BMW’s biggest competition is Mercedes, which is neck-and-neck with BMW in terms of the market share of new car registrations in Europe at the end of the first half of 2016, according to figures by research group JATO Dynamics. While BMW still has a larger overall market share, Mercedes gained more market share than BMW in the first six months of the year.

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