By Mary de Wet

 

BMW AG raised its outlook for certain earnings metrics for the financial year 2021, predicting higher vehicle prices would outweigh the chip shortage.

The German auto maker expects its Ebit margin for its automotive segment to be between 9.5% and 10.5%, up from its previous forecast of 7% to 9%.

The increase was expected by analysts who, when BMW released the previous forecast in August, predicted the luxury-car maker would lift the full-year autos margin to 8%-10% when reporting results for the third quarter.

BMW said Thursday it expects its return on equity for its financial services segment to be 20% to 23%, up from 17% to 20% previously forecast.

"Whilst the semiconductor supply restrictions are expected to further impact production and deliveries to customers in the coming months, BMW AG expects that the continuing positive pricing effects for both new and pre-owned vehicles will overcompensate these negative sales volume effects in the current financial year," the company said.

The auto industry's chip troubles trace back to the early days of the Covid-19 pandemic, when auto suppliers canceled semiconductor orders amid weak demand. Consumer-electronics companies soaked up much of that capacity, leaving car companies and their parts suppliers with a dearth of chips when car sales recovered in the summer of 2020.

Further disrupting chip supplies are fresh bottlenecks in how semiconductors are tested and packaged in Asia. In addition, semiconductor manufacturers are phasing out the low-tech, low-margin chips that are prevalent in new vehicles, raising concerns about the availability of those chips further out.

Consulting firm AlixPartners LLP has said the chip shortage could lead to $210 billion in lost revenue for the global automotive industry this year.

 

(Kim Richters and Mike Colias contributed to this article.)

 

Write to Mary de Wet at mary.dewet@dowjones.com

 

(END) Dow Jones Newswires

September 30, 2021 16:03 ET (20:03 GMT)

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