Increasing costs for new models and technology will weigh on revenues at BMW for the rest of the year, it stated on Tuesday, as the German automaker fights to regain ground lost to competing Mercedes-Benz.
BMW, the leading seller of luxury cars for years, was surpassed by Mercedes last year, and its 3rd quarter operating profit dropped 3 percent as it invests in catching up.
The company is investing money on electric and self-driving innovations while also upgrading its line-up of traditional models, stated upfront costs for the upgraded X3 sport-utility car, due to display in showrooms this month, and the all-new X2 and X7 models would weigh on fourth-quarter outcomes.
“Substantial advance payments on R&D (research and development) will be required at present and in the coming years,” finance chief Nicolas Peter stated.
He anticipated a tough fourth quarter, echoing Volkswagen‘s Audi brand which is also revitalizing its line-up of luxury and compact models.
“BMW used to be in a league of its own but nowadays it faces a completely different level of rivalry from Mercedes, Audi and Land Rover, plus a load of other rebooted smaller players and obviously Tesla,” stated Bernstein analyst Max Warburton.
Investing in R&D at the BMW group, that includes the Mini and Rolls Royce brands in addition to its namesake cars, jumped over a fifth in the first 9 months of this year to 4.1 billion euros ($4.7 billion), Peter stated.