The Whining

Image source: Warner Bros. via YouTube

What's going on?

German carmaker BMW gave a disappointing outlook for the rest of the year on Wednesday.

What does this mean?

BMW barely produced any more cars last quarter than it did during the same time in 2021, with chip shortages slowing production to a crawl. That must’ve been especially frustrating given that orders – particularly for EV models, which are on track to make up 10% of all BMW’s deliveries this year – were at a record high. It’ll be hard not to look at that as a missed opportunity: the carmaker said demand was already starting to slow down, particularly as European customers contend with rising inflation and interest rates. And since BMW thinks this dynamic and the aforementioned chip shortage will stick around, the carmaker was pretty dispirited about its outlook for the rest of the year. Investors know the feeling: they sent its stock down 6%.

Why should I care?

The bigger picture: BMW is a warning light.
BMW’s outlook was in contrast to rival Mercedes, which said last week that it’s expecting orders to hold up this year. And while Peugeot-parent Stellantis admitted demand would fall eventually, it was confident that this year would be fine. So it’s not like investors were naive to the possibility that an economic downturn would impact the industry: they just thought they had till 2023 before the cracks started to show.

Zooming out: Eat the rich.
Europe’s gas shortage is set to hit harder in the next few months, which will make things even more complicated for carmakers like BMW. For consumers too, which might be why the International Monetary Fund said on Wednesday that European governments should pass price increases on to wealthier individuals and shield the poorest with targeted relief. That, it thinks, will encourage people to save more energy or switch to greener alternatives (tweet this).

Originally posted as part of the Finimize daily email.

The top 2 financial news stories in 3 minutes. Join over one million Finimizers

Read next

Young At Heart

Sign up to Finimize

Get the two most important global financial news stories each day. Sent at midnight UK time.

Get started with one email a day

The top financial news stories in 3 minutes.