BMW plans to reduce engine range to maximize profitsNovember 6, 2019
BMW’s operating profit in the third quarter grew by 33% due to an increase in SUV sales, as well as the absence of one-off factors that reduced profit a year earlier.
The profit of the Bavarian brand before interest and taxes (EBIT) rose to 2.29 billion euros from 1.72 billion euros, BMW said in a statement on Wednesday.
The automotive division’s operating margin grew to 6.6% from 4.4% the previous year, when the new emission rules led to significant savings and discounts from competitors and hit BMW profits. BMW car sales were up just 3.6% in the quarter, but shifted from sedans to SUVs, including higher-margin X3 and X4 models.
BMW has confirmed that it expects a significant reduction in pre-tax profit, a slight increase in vehicle supplies and an EBIT margin of 4.5% to 6.5% in the automotive division as it prepares for electric vehicles. The brand management sees a doubling of demand for electrified cars by 2021 and an increase in sales of environmental vehicles by 30% annually from 2021 to 2025.
BMW is currently facing higher production costs as it prepares plants for the production of hybrid and all-electric cars with plug-ins, which forces them to cut costs in other areas in order to achieve more than 12 billion euros in efficiency by the end of 2022.
BMW said it would cut its vehicle development time by a third and cut its powertrain by 50% since 2021.
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