© Reuters. FILE PHOTO: An employee stands near a BMW M3 GT2 vehicle that was on display at the BMW booth during a media day for the Shanghai Auto Show in Shanghai, China on April 19, 2021. REUTERS / Aly Song
By Nick Carey
LONDON (Reuters) -BMW remains on track to meet its profit targets for 2021 despite rising raw material costs, the German automaker said on Friday after largely staying away from rivals like Volkswagen (DE :).
Volkswagen CEO Herbert Diess said on Thursday that Europe's top automaker was in "crisis mode" because of the chip shortage that would affect profits in the second quarter, while Ford Motor (NYSE 🙂 Co said last week that the shortage of chips could cut its vehicle production in half in the second quarter.
BMW is known for its close relationships with suppliers and has worked with them to avoid disruption. Apart from a temporary cessation of MINI production in Great Britain, the automaker was not affected.
BMW said sales of its electric vehicle models more than doubled in the first quarter as it also benefited from higher prices and strong demand in China.
BMW had already reported a 370% increase in pre-tax profit as it recovered stronger than expected after a pandemic-ridden first quarter of last year.
Sales in China almost doubled in the first quarter compared to the same period in the previous year.
The recovery in consumer demand in China in the second half of last year helped BMW and its German competitors Volkswagen AG (OTC 🙂 and Daimler AG (DE 🙂 posts solid profits for 2020 despite the global coronavirus pandemic.
BMW also saw solid growth in other regions in the first quarter, including a 17.4% jump in sales in North America, driven by strong demand from US drivers.
"The first quarter shows that our global business model is successful even in times of crisis," said Oliver Zipse, Chief Executive Officer, in a statement. "We are firmly on the way to sustainable and profitable growth."
Most of the auto industry is affected by a global semiconductor chip shortage that is closing many assembly plants, reducing inventory levels and driving up prices for new and used vehicles.
The German automaker announced that first quarter results have also received a boost from sales of previously leased vehicles, particularly in the US market.
The automaker expects to have 2 million fully electric cars on the road by 2025.
BMW expects the pre-tax margin for its core auto business to be on the high end of its previous forecast of 6% to 8%.
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