BMW innovation to drive profits
BMW reported its weakest profitability since 2010 this week, capping a negative year for chief executive officer Harald Krueger after the luxury-car marque lost its crown to arch-rival MercedesBenz.
Amid higher spending on battery-powered and autonomous-driving technologies, BMW's automotive profit margin narrowed to 8.9% in 2016 from 9.2% a year earlier. The shares fell as much as 4.2%, the most in four months.
“We are fully focused on implementing our strategy,” which involves pivoting to self-driving, electric vehicles, Krueger said. "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 resources on innovating instead of chasing short-term sales volume.
The carmaker plans to launch the self-driving, electric iNext model in 2021. To manage rising development costs, BMW is pushing high-margin traditional models, such as the new X7 sport utility vehicle 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 overall outlook is clouded by global political and economic volatility.
Rising sales pushed BMW's group revenues 2.2% higher to €94.2 billion. While BMW's automotive margin stayed within its target range of 8% to 10%, it’s lower than Mercedes’s 10%.
BMW said it plans a dividend of €3.50 per share for 2016, its highest yet, after paying €3.20 a year earlier. – Bloomberg