BMW has warned its 2018 profits will fall and lowered its guidance for car profit margins, as the German car manufacturer wrestles with competition, rising costs and new rules on emissions.
The group pinned its problems on several factors, including international trade conflicts, which it said were “distorting demand more than anticipated and leading to pricing pressure in several automotive markets”.
It claimed the introduction of a new vehicle testing standard, the WLTP, had “led to significant supply distortions in several European markets”.
Harald Krüger, BMW’s chair, said the company “remains fully committed to its goal of leading the transformation of the industry”.
The automotive industry is experiencing strong headwinds currently, buffeted by both rising standards of production and pressure brought on by international disputes, which can have a strong effect in such an export-reliant industry.
Rival car manufacturer Daimler, parent of Mercedes, cuts its targets in June, and several others in the industry have warned that US President Donald Trump’s trade war with China is damaging demand in one of the sector’s largest markets.
BMW is feeling the effect of new, more stringent EU emissions tests, which are also impacting its major rivals Volkswagen and Daimler.
Revenues in BMW’s automotive segment are now expected to be down on last year, with group profit before tax also expected to take a hit.
Earnings before interest and tax margins in its car production division are now expected to be “at least seven per cent” – falling from the eight to 10 per cent that had previously been predicted – the first time they have slid below eight per cent since 2010.