Supply chains remain a major problem for Mini

A shortage of Mini parts from Ukraine has led to a halt at Oxford's car factory being extended to two weeks.

The problematic transition to electrification amid continuing pandemic- related supply chain disruption has seen deliveries at Mini, the carmaker that produces the majority of its vehicles at the Cowley plant in Oxford, drop by more than a fifth.

The news came as its parent company, the German giant BMW, warned of a deteriorating outlook for the motor industry, with soaring inflation and rising interest rates likely to dampen consumer demand.

The one bright bit of news for the group was the performance of Rolls-Royce Motor Cars and the ability of the Goodwood-based manufacturer to get the world’s rich to part with their money, as strong sales of Rolls’s £265,000 four-wheel-drive Cullinan helped the business increase first-half volumes by nearly 7 per cent to 3,191. That is on top of the record 5,568 vehicles it delivered in 2021.

At Mini, a 21 per cent fall in deliveries in the second quarter saw it produce 140,000 cars in the first half of the year, down nearly 11 per cent year-on-year. BMW said 18 per cent of all Minis made are now electric.

For the second quarter of the year, BMW provided a snapshot of how dysfunctional the automotive market has become. Its number of deliveries fell by 20 per cent to 496,000 as it was unable to produce enough cars to meet demand. However, that supply/demand mismatch meant it was able to force through eye-watering price increases. As a result, revenues improved by 24 per cent to €34.7 billion.

Countering that is the continued increased cost of sourcing microchips; poor availability of wire-harnessings traditionally sourced from Ukraine; soaring energy and materials prices; and the difficulties of doing business in China because of a new wave of Covid-19 lockdowns. The result was a 34 per cent plunge in second quarter pre-tax profits to €3.92 billion.

That sent shares in BMW in Frankfurt sliding €4.51, or 5.5 per cent, to €76.57. The company, valued at about €50 billion, has seen its stock fall nearly 25 per cent since the start of the year.

The performance of BMW Group sales in the UK is poor, but not as bad as elsewhere. UK deliveries fell 16 per cent year-on-year against an average around the world of 20 per cent, including a 28 per cent fall in China.

“The outlook for the world’s automobile markets in 2022 has deteriorated further,” BMW said. “The continuing limited availability of intermediate products and raw materials means that new vehicles continue to be in short supply.

“Rising inflation and interest rates are resulting, in many markets, in less favourable financing conditions for consumers, potentially reducing willingness to spend. The outlook is further dampened by the global effects of the ongoing war in Ukraine and lockdowns in China.

“BMW Group had assumed the supply situation for semiconductor components would ease during the second half of 2022. It is no longer expected to improve appreciably over the remainder of the year. BMW also expects higher expenses for raw materials and energy in the second half of the year, particularly due to reduced gas supplies, with a corresponding negative impact on earnings in the form of further rising costs of material and manufacturing.

“High inflation and rising interest rates worldwide are making conditions for consumers less favourable and are likely to influence spending behaviour in the coming months.”