BMW has raised its profit forecast for 2021 to 9.5% to 10.5%, a bump from the previous expectation of 7% to 9%. This surprised investors, especially at a time when production is affected by the global semiconductor shortage, Forbes reports.

Bernstein Research analyst Arndt Ellinghorst said “BMW confirmed it was well on track to deliver solid earnings for the second half this year and more importantly for 2022,” following an official statement it made recently.

“Whilst the semiconductor supply restrictions are expected to further impact production and deliveries to customers in the coming months, BMW expects that the continuing positive pricing effects for both new and pre-owned vehicles will overcompensate these negative sales volume effects in the current financial year,” the statement read.

Commenting on BMW’s revised outlook, other analysts said premium automakers are currently in high demand, especially for their high-margin flagship models. In the US, new car transaction prices are extremely high, but it’s not all a bed of roses.

David Leggett, an analyst at GlobalData, said the trend is “a double-edged sword in many ways. There are tougher times ahead for the industry though, with some uncertainty over transaction prices and demand as the global economic rebound slows. Automotive company margins will also start to be squeezed by higher costs, particularly investment in electrified vehicles, as well as the effects of supply chain disruptions.”