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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.

Zero-emission zones are forcing Rolls-Royce to develop its first EV

Rolls-Royce confirmed its first series-produced electric car will debut before the end of 2020. The BMW-owned firm is pivoting toward electrification to give its customers access to city zero-emission zones. Instead of putting batteries in one of its existing models, the company will enter the EV segment with a new nameplate. Unverified reports claim the car will replace the Wraith and the Dawn, so it could arrive as a coupe and/or as a convertible, and Automotive News learned it will ride on Rolls-Royce's modular aluminum platform. It's too early for executives to provide technical specifications. Rolls-Royce could choose to borrow components from its parent company, or it could develop the technology on its own. Regardless, the brand stressed its customers aren't clamoring for a zero-emission options, but regulations are forcing Rolls to go electric. "There is no demand from customers, but we need to be in a position to sell them a car if legislation forbids them from driving a combustion-engined car into the center of a city," a spokesperson told Automotive News. Company CEO Torsten Muller-Otvos announced the model is currently being developed, and it's scheduled to make its debut "within this decade." He added an electric powertrain fits the brand's image perfectly, because it's silent and it delivers the mammoth amount of torque customers expect, whether they're driving or being driven. Batteries add weight, but no one buys a Rolls-Royce thinking they're getting a nimble, feather-light car. In the meantime, Rolls-Royce will continue fine-tuning its mighty V12 engine, which it anticipates will power most of the cars it builds until the end of the 2020s. And, don't expect it to release a plug-in hybrid model. It's skipping gasoline-electric technology and going straight from 12-cylinders to electric motors. Rolls-Royce has been on the fence about electrification for about a decade. It introduced an electric version of the last-generation Phantom named 102EX at the 2011 edition of the Geneva auto show, and it briefly considered giving the sedan the proverbial green light for production. It backpedaled when it realized the technology still had serious limitations, notably in terms of driving range, and that its customers weren't interested in going electric. Engineers tested hybrid prototypes in the 2010s, but they remained at the test mule stage.

BMW sold 2.49 million BMW, Mini and Rolls-Royce vehicles in 2018

FRANKFURT — German carmaker BMW on Tuesday said it achieved record sales of 2.49 million BMW, Mini and Rolls-Royce vehicles last year. "BMW Group achieved record sales in 2018. 2.49 million vehicles mean the BMW Group is the world's leading premium automotive company for the 15th year running," Chief Executive Harald Krueger said. In 2017, BMW Group sold 2.46 million vehicles. Daimler has not yet released annual sales figures for Mercedes-Benz passenger cars, so it remains unclear whether BMW brand overtook Mercedes-Benz in terms of sales in 2018. Sales of BMW, Mini and Rolls-Royce cars were higher than Mercedes-Benz in 2017.