BMW cut its auto division’s 2022 profit margin forecast on Wednesday.

BMW cut its auto division’s 2022 profit margin forecast on Wednesday.

BMW Group said it now expects an earnings before interest and tax (EBIT) margin of 7-9% for its auto business instead of 8-10%, due to the impact of the unfolding crisis in Ukraine. Russia’s invasion of Ukraine and COVID-19-related disruptions in China have forced automakers from Toyota to Tesla to close factories and raise prices, with many warnings of further changes if conditions fail to stabilize.

BMW said that while it was still able to source some parts from western Ukraine and engaged suppliers in other locations around the world to keep production up, further interruptions were expected in the coming weeks.

The German automaker, which sold a record 2.52 million vehicles last year despite a semiconductor shortage, had an EBIT margin of 10.3% for 2021, the highest since 2017. It had expected an even higher number of vehicles this year. but now expected to be comparable to 2021.

BMW said the war in Ukraine made it difficult to provide accurate guidance for 2022 and failed to factor in possible long-term implications in its forecast. The automaker, which more than doubled pre-pandemic profits to 16 billion euros ($17.67 billion) in 2021, said it expects a significant increase in its pre-tax profits for the current year as a result of the full consolidation of BMW Brilliance in China.

Tesla raised prices twice in a week amid rising raw material costs, and Volkswagen warned its outlook could be revised within a month if it doesn’t close new suppliers for wire harnesses previously made in Ukraine.

(Reporting by Christina Ammann; Writing by Victoria Waldersee, Miranda Murray; Editing by Emma Thomasson and Alexander Smith)

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