BMW earnings fall amid market turmoil over emissions tests
The company is expanding efforts in electric vehicles and autonomous driving as well as offering transportation as a service that doesn't involve owning a car
FRANKFURT – Germany luxury automaker BMW says net profit fell 24 per cent in the third quarter as the company spent more on new technology and faced market disruptions due to other companies failing to get vehicles certified in time for new European Union emissions tests.
Net profit announced Wednesday fell to 1.40 billion euros ($1.6 billion) from 1.84 billion euros in the year-ago quarter. Revenues rose 4.7 per cent to 24.74 billion euros.
The Munich-based automaker said it was increasing its investment in the new technologies such as autonomous and electric cars that are expected to transform the industry in coming years. It said research and development expenses in the first nine months of the year rose by 400 million euros to 3.8 billion, and would total 7 per cent of sales for the year.
BMW managed to get its cars certified under tougher new emissions tests but Daimler and Volkswagen both had to sell off uncertified vehicles ahead of the Sept. 1 deadline, leading to pressure on prices. BMW also faced headwinds from warranty actions and trade tensions. Profit margin on sales, a key earnings metric, fell sharply to 4.4 per cent from 8.6 per cent for the automotive business. BMW also makes motorcycles and has a financial services business.
CEO Harald Krueger said that “our forward-looking approach has absolute priority” as the company spends to expand its efforts in electric vehicles and autonomous driving as well as offering transportation as a service that doesn’t involve owning a car. The company has agreed to form a joint venture with Daimler combining the two companies’ efforts in smartphone apps for taxis, parking locator services and car sharing.