BMW·Audi Volkswagen, Overcoming Adversity and Stretching Out Again

BMW Korea Operating Profit Turns Positive... Audi Volkswagen Significantly Reduces Operating Losses

2020 Tiguan 4MOTION Prestige (Photo by Volkswagen Korea)

[Asia Economy Reporter Kim Ji-hee] BMW and Audi-Volkswagen, traditional powerhouses in the domestic imported car market that had been shaken by adverse factors, are gradually recovering.

According to each company's audit report on the 14th, BMW Korea recorded an operating profit of 81.7 billion KRW last year. This marked a turnaround to profitability within a year after posting an operating loss of 477.3 billion KRW in 2018.

BMW Korea had conducted a massive recall of about 170,000 vehicles following a fire incident during driving in the summer of 2018. At that time, the recall costs negatively impacted profitability, and the German headquarters provided support worth approximately 400 billion KRW. However, as sales normalized from around mid-last year, the company achieved a turnaround to profitability. The key factor was that a warranty provision liability of 300 billion KRW related to the fire incident was not recorded. Through this, BMW Korea significantly reduced selling and administrative expenses, which had more than doubled compared to the previous year in 2018, to about 117.7 billion KRW last year.

Audi Volkswagen Korea also improved its performance last year, the second year since sales resumed. Audi Volkswagen Korea's sales last year amounted to 1.2012 trillion KRW, a 6.5% increase compared to the previous year. Although it recorded an operating loss of 37 billion KRW, the loss has been steadily decreasing from 64.1 billion KRW in 2017 and 63.3 billion KRW in 2018. Audi Volkswagen Korea had suspended sales in 2015 due to the Dieselgate scandal and officially resumed sales in 2018. However, even after restarting sales, it was hampered by a limited product lineup and delays in diesel vehicle certification. Despite not being able to get sales fully back on track, the company is showing a clear recovery trend and is considered to be holding its ground well.

In particular, these two brands are expected to maintain their upward momentum this year as they have planned the most aggressive new car strategies. Of course, the outlook is not entirely rosy. There are concerns that the novel coronavirus disease (COVID-19), which is spreading worldwide, could pose a challenge. An industry insider said, "BMW and Audi-Volkswagen are considered traditional powerhouse brands expected to continue growing in line with the expansion of the domestic imported car market. However, how well imported car brands can withstand the impact of COVID-19 this year could be a variable."

This content was produced with the assistance of AI translation services.