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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 and Samsung enter expanded battery agreement [w/video]

What's good for the goose is good for the gander. In this case, the goose is BMW and the gander is Samsung. And their five-year plan has worked out well. The German automaker this week expanded its current agreement with the South Korean battery-making giant. BMW and Samsung SDI reached a memorandum of understanding for Samsung to keep making batteries for BMW's growing stable of i3 battery-electric and i8 plug-in hybrids as well as yet-to-be revealed hybrid models. No dollar amount or new time frame was revealed, but with BMW already moving about 5,400 i3 vehicles during the first six months of the year, there should be a substantial amount of funds changing hands. BMW started working with Samsung in 2009 when it began buying batteries for its Megacity electric vehicle from SB LiMotive, a 50-50 joint-venture between Samsung SDI and Bosch. Things have been looking up for Samsung since last August, when Tesla Motors decided to diversify its battery supply chain by branching out beyond Panasonic and buying some of its lithium-ion batteries from Samsung. Feel free to check out the Samsung-Bimmer press release, along with a video report, below. BMW Group and Samsung SDI expand partnership BMW Group and Samsung SDI expand partnership: Signing of a memorandum of understanding for delivery of further battery cells in signing of MoU for delivery of further battery cells Seoul. The BMW Group and Samsung SDI plan to expand their supply relationship for battery cells for electro-mobility. The two companies signed a memorandum of understanding (MoU) to this effect today in Seoul. Samsung SDI will supply the BMW Group with battery cells for the BMW i3, BMW i8 and additional hybrid models over the coming years. The most important elements of the agreement are the increase in quantities delivered over the medium term, in response to growing demand for electro-mobility, and further technological development of battery cells. Dr. Klaus Draeger, member of the Board of Management of BMW AG, responsible for Purchasing and Supplier Network: "Our partnership with Samsung SDI is a good example of successful Korean-German cooperation on innovative technologies. The battery is a key component in every electric vehicle – since it basically determines the range and performance capabilities of the car.

Mercedes chief invites Audi, BMW to compete in F1

Mercedes-Benz didn't just win the Formula One World Championship in 2014 – it positively dominated it. The team won all but three of the grands prix this season, scoring a one-two finish at more than half of them and landing at least one car on the podium at every race without exception. It goes without saying, then, that the German automaker thrives on competition, but now it's welcoming even more. Speaking with Germany's Sport Bild at its homecoming celebration in Stuttgart, Daimler chief Dieter Zetsche welcomed Mercedes' biggest rivals Audi and BMW to join it on the F1 grid. Noting that the three German brands share some 80 percent of the market for luxury automobiles, Zetsche said that F1 would make a natural arena of competition for Mercedes, Audi and BMW to fight for top bragging rights. The three currently compete against each other in front of home audiences in the DTM touring car series – effectively Germany's equivalent to NASCAR – but of the ten races held this year, the majority were in Germany itself, and all of them took place in Europe. BMW last competed in F1 when it bought the Sauber team in 2006, but withdrew from the series in 2009. Despite its progenitor Auto Union having fielded the famous Silver Arrows in pre-war grand prix racing, Audi has never been a player in modern F1 racing, though recent rumors have linked it to a potential foray – spurred by the arrival of sister-company Porsche on its home turf at Le Mans, the departure of several of its key endurance drivers and the hiring of former Scuderia Ferrari chief Stefano Domenicali. Porsche had similarly considered an F1 program before getting the go-ahead to compete with Audi at Le Mans. As for the prospect of Mercedes competing in other international racing series, Zetsche added that year-long preparations for 24 hours of racing at Le Mans didn't present a good cost-benefit ratio in his estimation, but that Formula E (where Audi currently supports a quasi-works entry) would be worth a closer look.