BMW banking on fully electric vehicles and the top-end segment to remain the main growth drivers in 2024

Following a successful 2023, in which the Automotive Segment reported its highest-ever operating result, the BMW Group aims to continue on its profitable growth course in the current financial year. Fully-electric vehicles (BEVs) and models from the upper premium segment should remain the main growth drivers again in 2024 – including the BMW 7 Series models, the BMW X7 and the Rolls-Royce model family, with the fully-electric Rolls-Royce Spectre, the company said in a media release.

In both segments, the BMW Group expects to see significant double-digit growth in the current financial year. In addition, the BMW 5 Series models, including the BMW i5*, which will also be available for the first time as a fully-electric Touring model this year, plus vehicles from BMW M GmbH, will contribute as well.

Overall, the BMW Group expects to see a slight increase in deliveries in the Automotive Segment in 2024.

“The more challenging the framework conditions become, the more important it is to implement a consistent strategy. As a result, strong products and a high degree of responsiveness will remain our key success factors in 2024. This will continue to make us a reliable partner for customers, investors and stakeholders in the future,” said Oliver Zipse, Chairman of the Board of Management of BMW AG, on Thursday.

R&D spending and capital expenditure to peak in 2024, as planned

The company will maintain its strategic course, as planned, in 2024, with extensive investment in its plants, its range of premium vehicles and innovative technologies. This is seen in the construction of the plant in Debrecen (Hungary) and high-voltage battery assembly facilities in Shenyang (China), Woodruff (USA), San Luis Potosì (Mexico) and Irlbach-Straßkirchen (Lower Bavaria). With extensive expansion at Plant Munich and electrification of the MINI plant in Oxford, capital expenditure is set to peak in 2024. Digitalisation of the company and its products also necessitate higher spending.

In addition to capital expenditure, R&D spending will also reach a new high this year. This will mainly be focused on electrification of the vehicle portfolio, including the products of the NEUE KLASSE, as well as in-car digital innovations, such as connectivity, software stacks and automated driving.

“We are investing in the future of our company like never before. Construction and modernisation of our plants and the planned expansion of our portfolio are progressing quickly this year. Our capital expenditure and R&D spending will reach new levels. We are expecting a capex ratio above 6% and an R&D ratio above 5%. Both metrics will then return to their usual strategic range. Despite these major investments in our future, we are targeting a free cash flow of over six billion euros in the Automotive Segment in 2024. This speaks to the financial strength of the BMW Group,” said Walter Mertl, member of the Board of Management responsible for Finance. “We continue to focus on cost discipline and sustainable profitability – the long-term target range of 8-10% for EBIT margin in the Automotive Segment remains our benchmark.”

The company is also aiming to achieve an Automotive EBIT margin of 8-10% for the current financial year. This includes the continued dampening effect of depreciation and amortisation for BBA assets from the purchase price allocation.

MINI and Rolls-Royce to become electric-only brands

The MINI and Rolls-Royce brands are well on their way to a fully-electric future from the early 2030s onwards. A glimpse of this is already provided by the New MINI Family and Rolls-Royce Spectre, with the first units already delivered to customers. New orders for Rolls-Royce Spectre already extend into 2025. Production of the new MINI Countryman has now also ramped up for the first time at BMW Group Plant Leipzig, where it will be built as a fully-electric model and with a highly efficient internal combustion engine.

Depending on prevailing market conditions in the second half of the decade, development of raw material prices and availability, and the pace at which a comprehensive charging infrastructure is created, more than 50% of all BMW Group vehicles delivered worldwide could have a fully-electric drive train before 2030. If PHEV models are included, this percentage is correspondingly higher.