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 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 SUV, as it covers the steep costs of developing vehicles of the future.
“We expect start-up and marketing costs regarding new models to increase over the course of the year,” BMW CFO 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 SUV 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.
BMW’s profit from automaking 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.”
R&D 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 powertrains 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.
Thursday’s figures confirmed preliminary results published in April.