Munich - BMW stuck to a conservative profit forecast as CEO Harald Krueger seeks patience to push through a transition to
self-driving, electric cars.
While rival Daimler AG upgraded its target to a
“significant” gain in 2017, BMW kept its goal of a “slight” increase in
earnings, according to a statement from the Munich-based company. BMW will
focus on its higher-end models in coming years, including a new X7 sport
utility vehicle, as it covers the steep costs of developing the rides of the future.
“We expect start-up and marketing costs regarding new models
to increase over the course of the year,” BMW Chief Financial Officer Nicolas
Peter said in the statement, noting that spending on electric technologies and
autonomous features will also be high. “Short-term gain is not the decisive
factor for us: we remain focused on sustainable, profitable growth.”
Weighed down by rising expenses, BMW has maintained a
cautious approach even after Daimler’s Mercedes-Benz surged past it in sales
last year for the first time in more than a decade. The first steps of BMW
seeking to fight back were evident in March, when Krueger outlined plans for 40
new and revamped models.
The offensive includes the X2, a compact sport utility
vehicle scheduled for 2018, as well as the full-size X7. Selling more of the
lucrative SUVs and top-of-the line sedans alongside the revamped bread-and-butter
5-Series -- is vital as the manufacturer aims to boost profitability. BMW’s new
flagship, the self-driving electric iNext, is due for release in 2021.
Strong Start
BMW’s profit from auto making rose 6.1 percent in the first
quarter to 1.87 billion Euros ($2 billion) on the back of climbing sales, the
automaker said in the statement, describing the growth as “significant.”
“Despite this stronger-than-expected start to the year, BMW
has opted for a conservative approach,” said Georges Dieng, an analyst at
Natixis Securities. “We think there was room for a more upbeat message.”
Read also: BMW SA to expand IT staff
Research and development costs jumped 35 percent to 1.32 billion
Euros during the quarter. That hurt the automotive return on sales, which fell
to 9 percent from 9.4 percent a year earlier.
Unlike its competitors, BMW has chosen to add electric power
trains to existing models rather than design specific e-cars. The company says
that approach puts it in a good position to react to changes in demand, as
consumers to date haven’t shown much enthusiasm for the green technology.
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