BMW Car Sales Profit Margin Falls Down

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BMW group's profit margin on cars dropped as the company was hit by spending on more engineering staff and electric car technology.

BMW and its rival firms are struggling to achieve healthy profit margins because of huge investments in new technology such as electric cars, self-driving cars, cleaner diesel engines and ride-hailing business models.

The German automaker emphasised on its full-year target to be slightly increased in pre-tax profit but warned that the profit margin will be under pressure.

The reason for this is the continued investments from the manufacturer to venture new business models in the automotive industry.

Chief Financial Officer Friedrich Eichiner said, "Costs generally rise towards the end of the year so we expect this to have a dampening effect on earnings."

He added, "Capital expenditure will also be higher in the last three months of the year, mainly due to the start of production and ramp-up of the new BMW 5 Series."

Whereas the sales of the BMW, Mini and Rolls-Royce increased by 7.1 percent in the quarter ending in September but the BMW's core automotive sales fell to 8.5 percent from 9.1 percent of last year.

BMW stated that this downward growth was because of higher personnel expenses as there was an increase in staff members by 3.6 percent and changes in the mix of vehicle models sold.

BMW said that it will maintain the return of sales at its automotive division between eight to ten percent, which has been achieved for last 26 quarters. The BMW group also gained profit from its financial service business.

Read more on: #bmw #auto news
Story first published: Sunday, November 13, 2016, 17:00 [IST]
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