A recent Wall Street Journal article highlights the operating leverage for several auto manufacturers. For example, BMW lost €666 million ($784.1 million) during the most recent quarter. A large part of the loss was due to the company's operating leverage. BMW loses $.43 for every dollar of lost sales, which of course means that the company gains $.43 for every increased dollar of sales. By way of comparison, Fiat Chrysler's operating leverage is about 18%, GM's is about 20%, and Ford's is about 25%. As a result, we would expect BMW's earnings to be more volatile when compared to other auto companies.
Sunday, August 9, 2020
BMW's Operating Leverage
