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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.

Rolls-Royce mulling V16 roadster, SUV

Rolls-Royce may be working on a new, mega-powerful roadster for 2017. CAR reports the convertible would conceivably boast a V16 engine. Of course, the report gets a little muddled here, with CAR saying the engine would be very similar to that of the one that powers the Bugatti Veyron - the French machine makes use of a W16 mill. Even so, the article says the Rolls-Royce version could put down around 700 horsepower. Design wise, we're told the creation will feature a suitably long nose with the passenger compartment pushed far to the rear.
Of course, 2017 is a long way off, and the thought of a 16-cylinder, naturally aspirated engine bowing under the crush of ever more stringent government fuel efficiency and emission regulations seems unlikely. We'll just put this one in the wait-and-see file for the time being. In the interim, you can hop over to CAR for a closer look at the magazine's rendering of the would-be roadster. If a V16 convertible does happen, look for a smug look on Rowan Atkinson's face.
Oh, and about that SUV? There's not much to report, though CAR does note that officials are keeping a close eye on rival Bentley and its plans for a luxury utility vehicle. Rolls brand boss Harald Krüger has even gone so far as to admit "we're regularly debating whether to take action."

BMW shuffles chairs in its design department

BMW Group has made some changes to its design team since August 1, and has shuffled top personnel to different positions at BMW Design, Mini Design and Rolls-Royce.
The BMW Design team led by Karim Habib (middle, right) gains a new head of Exterior Design in Domagoj Dukec (right), who has worked for the exterior design team since 2010 and shaped the Concept Active Tourer.
Oliver Heilmer (left), who has worked for BMW's interior design unit since 2000 and designed the 5 Series interior, replaces Marc Girard as head of Interior Design BMW Automobiles. Marc Girard goes to manage BMW's subsidiary design group, BMW DesignworksUSA.