BMW AG reported its weakest profitability since 2010, capping a negative year for Chief Executive Officer Harald Krueger after the brand lost the industry sales crown to arch-rival Mercedes-Benz.
Amid higher spending on next-generation technologies, BMW's automotive profit margin fell to 8.9 percent in 2016 from 9.2 percent a year ago, according to a statement on Thursday. Groupwide earnings before interest and taxes dropped to $9.92 billion (9.39 billion euros), missing the average analyst estimate of 9.82 billion euros, according to data compiled by Bloomberg. The shares fell as much as 4.2 percent, the most in four months.
"We are fully focused on implementing our strategy," which involves pivoting to self-driving, electric vehicles, Krueger said in the statement. "From 2019 onwards, we will be firmly embedding all-electric, battery-powered mobility in our core brands."
BMW, lacking the financial heft of rivals backed by a larger parent, is focusing its resources on innovating for the future instead of chasing short-term sales volumes. The Munich-based carmaker plans to launch the self-driving, electric iNext model in 2021 in a bid to regain its edge as an automotive leader. To manage the rising development costs, BMW is pushing high-margin traditional models, such as the new X7 SUV that's due in 2018.
Bolstered by the revamped BMW 5-Series and Mini Countryman, sales in 2017 will likely be slightly higher, the company said, adding that the outlook is clouded by global political and economic volatility.