BMW, the world's biggest luxury carmaker, has warned its outlook could be at risk from any further deterioration in the Chinese market, where its sales have begun to fall for the first time in a decade. But as Sonia Legg reports, BMW still expects record global sales and pretax profit for the year.
The state of China's economy has been worrying many in recent weeks. And the world's biggest luxury carmaker is no exception. Its second quarter earnings came with a warning. Sales in China have started to fall for the first time in a decade - and if they deteriorate further, its outlook could be at risk. BMW shares fell 2 percent But they're not the only auto maker expressing concerns - VW, Audi, Peugeot and Ford all have too, says CMC Markets Michael Hewson. SOUNDBITE: Michael Hewson, Market Analyst, CMC Markets, saying (English): "It's not the end of the world. What we are seeing is a pick up in the European car market but in terms of direction of travel the warnings that these car makers are giving us is largely symptomatic of the wider concerns that investors have about the Chinese economy as a whole." The German company had warned in May that growth in China would be "less dynamic." And it still expects record global sales and pretax profit for the year. But second quarter operating profit slid 3 percent as it sold a higher proportion of low-margin cars and invested in new models. It will be encouraged though by overall car sales at home - they were expected to be up 7 percent - the seventh consecutive monthly rise. Continental will welcome that too. The German tyre and auto parts maker has raised its full-year profit outlook after quarterly earnings jumped more than expected on a strengthening European market. It makes half its sales in the region. Continental shares rose 5 percent - it's also been benefitting from lower supply costs and falling oil prices.