BMW diminished by upfront costs for new car launches

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BMW will deepen cost cuts following higher development expenses added to a 27 percent fall in third-quarter operating profit, falling short of expert expectations as currency effects also took a toll.

Investments to make electric and self-driving vehicles, along with spending to boost production of new X5, X7 and 8-series luxury models weighed on revenues when tariffs between China and the United States and a cost war in Europe were already eroding margins.

Capital expenditure will increase again in the fourth quarter, BMW stated, owing to the start of production for a new version of its flagship model, the BMW 3 series.

“Further measures will be needed to support our profitability targets,” Chief Financial Officer Nicolas Peter stated in a call to discuss revenues, without providing details.

“Despite the difficult conditions, we are still targeting a free cash flow of three billion euros for the full year,” Peter included.

“In light of the current challenges, this will not be an easy task.”

BMW’s revenues before interest and taxes of 1.75 billion euros came in below the 1.8 billion euros forecast in a Reuters poll as higher raw material costs, currency effects, and 679 million euros worth of provisions for vehicle recalls had a effect.

Shares in BMW, whose other brands consist Mini and Rolls-Royce, dropped 1.9 percent to 75.44 euros by 1155 GMT.

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