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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.

Next BMW X6 to be larger, more aggressive

If the current BMW X6, introduced in 2008, is looking a bit too bland for your tastes, have no fear as the next-generation model is reportedly going to be larger and more aggressive than its predecessor.
Autocar is reporting that an insider has revealed the all-new second-generation X6 will make its world debut at the 2014 Moscow Motor Show, going on sale just after summer. More aggressive styling will help BMW distinguish its sportier X6 from BMW's more practical models, such as the X3 and X5, said the source.
The next X6 will again share platforms with the X5, but it will be stretched slightly to provide second-row passengers with more legroom. Powerplants will also likely mirror those of its mainstream cousin, including a range of turbocharged six- and eight-cylinder engines and a range-topping M model (the 2013 BMW X6 M is show above).

BMW may keep next 1 Series out of the US

As BMW prepares to introduce the all-new 2 Series coupe and convertible, the 1 Series name definitely won't be going away. We know new sedan and hatchback models are in the works; including the GT shown above. According to Car and Driver, though, the future of the 1 Series nameplate in the US could be dependent on rival premium small cars like the Mercedes-Benz CLA-Class and Audi A3.
In an interview with C/D, BMW's North American head of product planning and strategy, Paul Ferraiolo, said that pricing might be the biggest deterrent to offering the third-gen 1 Series in the US. As he points out, BMW currently prices the 1 not too far from the 3 Series, but Mercedes-Benz and Audi will have their new small cars priced well below the $30,000 mark. BMW's Mini brand will also factor into the consideration since the 1 GT will share its underpinnings with the next-gen Cooper lineup.