FRANKFURT, Germany (AP) — BMW misplaced money making vehicles within the first area as its car department was hit by using a 1.4 billion-euro ($1.6 billion) set-apart for an anti-believe high-quality from the European Commission and with the aid of higher up-the front fees for new era and factories.
The first-rate and investment spending, along with weaker pricing in some markets, brought about an operating loss for the organization’s vehicle-making enterprise of 310 million euros, while its economic services and motorcycle agencies remained profitable and pushed the organization as an entire into earnings.
The loss stated Tuesday compares with an running profit of 1.8 billion euros for the division inside the year-in advance zone.
Net income for the entire firm fell to 588 million euros from 2.28 billion euros a yr earlier. Revenue fell 0.9% to 22.Forty six billion euros.
The European Commission is investigating automakers on suspicion they colluded to limit competition within the development of emissions-reduction technology. BMW disputes the allegations and says it will project them legally but concedes a high-quality is much more likely than no longer.
The Munich-based employer became capable of barely increase the quantity of motors sold to 605,333 and said it expected a boost from new models. Those consist of advanced hybrid variations of its mainstay sedans, the 3-Series and the bigger 7-Series, in addition to of the X5 game-utility, which have prolonged their electric powered-most effective range earlier than the use of the inner combustion engine.
CEO Harald Krueger stated the company remained located for higher effects because of new products and leaner structures. “We continue to be firmly on path and assume commercial enterprise to advantage from tailwinds, specially in the second half of of the year, as new models turn out to be to be had,” he said in a announcement.
The agency saw improved charges for research and improvement totaling 1.Four billion euros and spending on vegetation, belongings and system of one billion euros. Increases got here from introducing new, flexible plant systems and building a brand new plant in Mexico.
BMW said it had visible stress on pricing in a few markets. A key metric, running earnings margin on its car commercial enterprise, declined to minus 1.6 percent from plus nine.7 percent inside the equal area a yr ago. Without the antitrust penalty, it might had been plus 5.6 percent.
The diminished profitability became in sharp comparison to the fats margins BMW used to rack up zone after area, and reflects the cost and regulatory pressure confronted with the aid of the global automobile enterprise.
Analyst Max Warburton at studies company Bernstein said that margins had now not been this low due to the fact that 2006-7, excluding the global economic disaster of 2008-nine. He stated the trouble was in part an increasing percentage of electrical motors, which convey higher manufacturing expenses. He cited that BMW became now not alone in seeing lower profitability given that luxury automobile competitor Mercedes-Benz, a part of Daimler AG, mentioned handiest a four.5 percentage operating margin except for its joint task in China.
Automakers face demanding situations on a couple of fronts. They face headwinds from tariff disputes between the U.S. And China and regulatory strain to lessen emissions of greenhouse gases and other pollution. And they must counting on income from their traditional commercial enterprise of selling cars with gasoline and diesel engines to fund heavy investments in new era expected to alternate non-public transportation in coming years.
Those consist of battery-powered autos, had to meet difficult emissions requirements in the European Union and in China in the coming decade, as well as approaches of imparting vehicles as a carrier together with automobile-sharing and journey-hailing through cellphone apps. In the long run, companies are operating on self sustaining automobiles that drive themselves all or part of the time.