BMW warns of cooling demand in car market

STORY: BMW has warned of tougher times ahead.

The premium car maker said Wednesday (August 3) that the second half looks like being highly volatile.

It says challenges from inflation to possible gas shortages are hitting demand.

Supply chain bottlenecks remain a problem too, while higher prices are only partially making up for lower output.

A survey out the same day from Germany’s Ifo institute also showed the outlook darkening for carmakers.

It found order backlogs shrinking, and price expectations plummeting.

BMW’s earnings were down 31% over the second quarter, dropping to around $3.5 billion.

That still beat forecasts, but the firm’s outlook was notably warier than arch-rival Mercedes-Benz.

Last week it raised its predictions for the year.

Analysts at Bernstein Research say BMW is the first carmaker to warn of softer demand.

They say that implies it is already seeing some downturn signals right now.

BMW shares dropped around 5% in early trades on Wednesday.