By Victoria Waldersee

BERLIN (Reuters) -BMW will not cut electric vehicle (EV) prices in China and may raise some car prices at a global level, to help weather the higher input costs of EV production, it said on Thursday following first quarter results.

The carmaker reported a higher earnings margin for its cars segment, at 12.1% from 8.9% a year earlier, but kept its outlook unchanged in the face of ongoing high costs and rising competition.

BMW said in March it intended to keep prices stable this year after two years of passing on rising costs to customers, but Chief Financial Officer Nicolas Peter said some more moderate hikes could still be expected.

“When it makes sense, we could adjust a price here and there,” said Peter, who will from this month be replaced in his role by Walter Mertl.

Peter and Chief Executive Oliver Zipse struck a cautious tone on the outlook for the global economy in coming months, calling the environment volatile and tense.

“Many experts assume that major economic areas are likely to drift further apart – both from a political and technological perspective, and also with regard to regulations,” Zipse said.

Sales were down 1.9% in Europe and fell 6.6% in China, attributed to inflation and the after-effects of the coronavirus pandemic. But an upward trend was visible in March and April, BMW said.

Pursuing ringfenced strategies in each region would allow the carmaker to compensate for weaknesses in one market through revenues from others, Zipse said, pointing to difficulties in China being offset in the first quarter by a stronger U.S. performance.

Daniel Roeska of Bernstein Research wrote in a note that markets may question why BMW had not raised its outlook in light of the cars’ increased margin.

“BMW has a reputation for guiding extremely conservatively … the top question for most investors, as with peer Mercedes-Benz, will be whether a guidance raise needs to occur some time later this year,” Roeska said.

Peter said it was too early to adjust the outlook.

Mercedes-Benz, which last week beat quarterly earnings forecasts, said it now expected to hit the higher end of its cars margin forecast of 12-14%.

(Reporting by Victoria Waldersee; Editing by Maria Sheahan, Alexander Smith and John Stonestreet)

tagreuters.com2023binary_LYNXMPEJ4303Y-VIEWIMAGE

tagreuters.com2023binary_LYNXMPEJ4303X-VIEWIMAGE