BMW Has Some Tough Decisions To Make

For nearly a year, BMW managed very successfully to navigate its way through the global semiconductor chip shortage crisis. Automakers like General Motors and Ford havegreatly sufferedand still do. But BMW apparently had a sufficient chip stockpile to keep things running smoothly.

That is until late last month when the Munich-based automaker was forced to idle all of its German production plants, resulting in alack of about 10,000 new vehicles, including the popularBMW 3 Series, from rolling off assembly lines. No new vehicles mean there's nothing to sell and that's a huge problem. Unfortunately, BMW has a problem, a fact highlighted in its most recent quarterly earnings report.

Despite solid earnings in the second quarter of the year, it sounded the alarm for the remaining six months of 2021. "The combined effect of systematic working capital management and production restrictions due to semiconductor supply bottlenecks resulted in a low level of inventories," the report states.

This isn't expected to change in the coming months as BMW's Chief Financial Officer, Nicolas Peter, further warned that "the longer the supply bottlenecks last, the more tense the situation is likely to become. We expect production restrictions to continue in the second half of the year and hence a corresponding impact on sales volumes." We don't know yet whether the lack of chips will affect the carmaker's massive Spartanburg, South Carolina plant, home of theX3, X4, X5, X6, and X7.