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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.

BMW i8 now has 10-month waiting list in UK

Reports that the BMW i8 would be a popular plug-in vehicle have been circulating since stories claiming 'sold out' status circulated late last year. Those turned out not to be entirely true, but now that deliveries have actually started, the $160,000 EV is proving to be only available to the patient in posh English shops. The Telegraph reports that there is a 10-month waiting period for the i8 in the UK, where one dealer (Park Lane in London's Mayfair) has managed to convince 170 people to place an order. Well, maybe convince isn't the right word. The store's sales manager told The Telegraph, "We've had numerous people asking to buy the display car. Many have said to me: name your price." Many locals want the car to avoid paying the expensive London congestion charge. The i8 uses a turbocharged 1.5-liter, three-cylinder engine and a 96-kilowatt electric motor to move from 9 to 60 miles per hour in only 4.2 seconds. The plug-in powertrain is good for 357 horsepower and 420 lb-ft of torque. The plugged portion gives the i8 an EV range of up to 22 miles. The first i8 in the US is going to be auctioned off at the Pebble Beach Concours d'Elegance Weekend next weekend.

BMW ponders increase in i3 production capacity on early demand

The 2014 BMW i3 is not slated to hit US showrooms until the second quarter of next year, but the response BMW has received for the all-electric hatchback has been positive enough that the automaker is already considering boosting production capacity. Bloomberg Businessweek reports that more than 8,000 customers have reserved an i3 so far, which is high, especially considering that BMW only planned to sell 10,000 i3s total in 2014.
Talking to BMW CFO Friedrich Eichiner, the report says that if the demand holds for the i3, BMW would increase capacity accordingly. The i3 goes on sale next month in Germany before a global roll out in the US, China and Japan, and with a starting price of $41,350, it is priced slightly higher than current small plug-in vehicles offered in the US like the Chevy Volt, Ford Focus Electric and Toyota Prius Plug-in, though features more use of advanced, lightweight materials.