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BMW warns profits will fall, plans $13.6 billion in cost-cutting

FRANKFURT, Germany — BMW said Wednesday that profits in 2019 will be "well below" last year's, and it will cut 12 billion euros ($13.6 billion) in costs by the end of 2022 to offset spending on new technology. The company said profits would be eroded by higher raw materials prices, the costs of compliance with tougher emissions requirements and unfavorable shifts in currency exchange rates. The Munich-based automaker also faces increased uncertainty due to international trade conflicts that could lead to higher tariffs. "Depending on how conditions develop, our guidance may be subject to additional risks; in particular, the risk of a no-deal Brexit and ongoing developments in international trade policy," said Chief Financial Officer Nicolas Peter. The company forecast a profit margin of 6 to 8 percent for its automotive business, short of the long-term strategic target of 8 to 10 percent, which it said still "remains the ambition" for the company if given "a stable business environment." BMW said it had no plans for layoffs even as it outlined cost saving measures that include dropping half of its engine variants as it seeks to reduce product complexity. The BMW, Mini and Rolls-Royce brands are to get a single sales division. Peter said that given the headwinds to earnings, "we began to introduce countermeasures at an early stage and have taken a number of far-reaching decisions." The company said the measures were needed "to offset the ongoing high level of upfront expenditure required to embrace the mobility of the future." Automakers around the world have faced heavy up-front costs for technology expected to change how people get from one place to another in the next decade. Those include electric cars and renting cars through smartphone apps. Yet the returns from such investments remain uncertain and auto companies face competition from tech firms such as Uber and Waymo. BMW made 7.2 billion euros ($8.2 billion) in net profit last year, down 17 percent from 2017, when it booked a gain of $1 billion from U.S. tax changes. The company faced headwinds from increased tariffs on vehicles exported to China from the United States. It also suffered from turmoil on the German auto market when companies faced bottlenecks getting cars certified for new emissions rules. BMW faces uncertainty from U.S.-China trade tensions that could result in new tariffs if talks do not result in an agreement. U.S.

Mini Art Beat is a loud, driving social media billboard

Video billboards are nothing new, but a video on a moving car that's blaring music? Now that's something that will catch your attention - especially if you're driving alongside it in the streets of London.
That's the exact intent of Mini's new Art Beat, a Cooper Countryman turned marketing device that is custom-fitted with a staggering 48,000 LEDs. On its nightly drives through the city, the compact crossover showcases brightly colored videos, graphics and animations contributed by people around the world via social media. The Mini Space Blog describes the Art Beat as the "most vibrant and customizable NOT NORMAL ride you'll ever lay eyes on."

Despite Mini's woes, Clubman sales surging

The Mini Clubman has a polarizing design, but those who like it are snapping it up. According to Automotive News, the Clubman is on pace to become Mini USA's best selling model. Almost 1,700 vehicles were sold during the first quarter of 2016, and the vast majority – 1,037 units – were sold last month alone. These facts are made all the more noteworthy because Mini's sales fell 15 percent during the first quarter. The surging sales of Mini's newest model are especially good news for the brand's coffers. The Clubman is the most expensive non- John Cooper Works model you can get, aside from the upcoming Convertible. It doesn't sound like there are too many Clubman models going for the $24,950 starting price, either. According to Mini Dealer Council Chairman Michael Vadasz, dealers are doing solid business on customized orders, which, he tells AN, "is what Mini is all about." About one in four Minis built today are custom orders submitted by consumers, who love taking advantage of the Porsche-like breadth of a la carte options, no matter what it does to the final price. The fact that Mini is seeing so many custom Clubmans, then, is a very good thing. As for why the Clubman is doing so well, Mini USA Vice President David Duncan says it's because the car just isn't so Mini, moving the brand beyond its traditional subcompact class to the compact segment, where it can challenge cars like the Audi A3. "We see that as a fast growing segment, so having an entry in there gives us that opportunity," Duncan told Automotive News. "And then when you look at the car itself, it's got a premiumness about it that really takes us to the next level and allows us to compete against brands that we weren't typically competing against." Related Video: This content is hosted by a third party. To view it, please update your privacy preferences. Manage Settings.