BMW Q2 earn­ings slip 1% on China mar­ket due to higher launch costs


Ger­man lux­ury au­tomaker BMW saw net profit slip 1 per­cent in the sec­ond quar­ter amid higher launch costs for new ve­hi­cles and a tougher mar­ket in China, a ma­jor pil­lar of its prof­its.

The com­pany said Tues­day that net profit fell to 1.75 bil­lion eu­ros (US$1.92 bil­lion) from 1.77 bil­lion eu­ros in the April-June quar­ter of last year.

Mu­nich-based BMW AG also said it sold a less prof­itable prod­uct mix con­tain­ing more com­pact cars, which typ­i­cally earn less per ve­hi­cle.

The profit mar­gin be­fore in­ter­est and taxes, a key earn­ings fig­ure, fell to 8.4 per­cent in the quar­ter from a strong 11.7 per­cent in the year-ago quar­ter.

An­a­lysts say key BMW mod­els such as the 5 Se­ries and 7 Se­ries sedans are near­ing the end of their life cy­cle, which can hurt sales as cus­tomers see newer prod­ucts from com­peti­tors. The com­pany has al­ready un­veiled a new 7 Se­ries, which will go on sale this fall.

Re­new­ing mod­els is costly but pays off if the new ver­sion sells bet­ter than its com­peti­tors. BMW faces tough com­pe­ti­tion for lux­ury car sales from Daim­ler AG’s Mer- cedes-Benz and Volk­swa­gen AG’s Audi.

The com­pany also cau­tioned that the Chi­nese mar­ket — a source of rich prof­its for Ger­man car­mak­ers in the past sev­eral years — is “nor­mal­iz­ing” and be­com­ing more com­pet­i­tive. BMW sales there slipped 1.4 per­cent in the quar­ter. Chi­nese eco­nomic growth has slowed in re­cent months.

Over­all, BMW sales boomed 20.2 per­cent to 23.935 bil­lion eu­ros, thanks to record num­bers of ve­hi­cles sold around the world but also strongly boosted by cur­rency ex­change rate shifts.

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