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BMW pledges to save €12bn, but keep workforce steady and launch more e-cars

Jill Petzinger
Jill Petzinger, Germany Correspondent, Yahoo Finance UK
The logo of BMW pictured during the Paris auto show in 2018. Photo: Reuters/Benoit Tessier/File Photo

BMW predicted a grim year ahead at its annual press conference today, saying it expected its 2019 pretax profit to plunge by over 10%.

The Munich-based carmaker also plans a €12bn (£10.3bn) cost-cutting plan running through to 2022, which will eliminate some models from its lineup and speed up development times whilst keeping employee numbers the same – at least for this year.

Group revenue for 2018 was €97.4bn, hardly any change from 2017, and total car deliveries were up a tick to 2,490,664 cars, but net profit fell by almost 17% to €7.2bn. Like every other carmaker, BMW is struggling with discount wars, strict new WLTP emissions standards, the global economic slowdown, and the trade dispute between US and China.

BMW pointed out that it was the largest US automotive exporter by value for the fifth consecutive year in 2018. It exported over 234,000 of its X models from its Spartanburg, South Carolina plant last year.

“We have our largest production site in the US, which allows us to produce SUVs for the US market,” Krüger said, adding that this puts BMW at an advantage over many other companies. 

Like its German competitors, BMW is pouring massive investment into electrifying its entire model range.

“By the end of this year, we will have 500,000 plug-in hybrid and electric vehicles on the roads,” Krüger said today. “From 2020, the popular BMW X3 will be our first model that we will offer with all three drive trains.”  

BMW will launch more than 20 new or updated models, and ramp up production in its Chinese plant in Shenyang to 650,000 vehicles per year. From 2020, it will make the first fully-electric iX3 in China and export it from there. “China is our largest single market and a strong driving force for e‑mobility.” Krüger said.

The company announced last month that it would partner with Daimler on a joint venture, combining their DriveNow and Car2Go car-sharing companies, and adding other app-based services to the bundle, like parking. The two rival German car giants have also agreed to partner up on tech development for autonomous cars.

READ MORE: Daimler and BMW invest €1bn into joint venture to battle Uber

Germany’s Süddeutsche Zeitung reported last week that the two carmakers are also mulling cooperating on electric-vehicle development. Both companies have declined to comment, however, a BMW source told the newspaper that purely from a financial point of view, they have little alternative but to cooperate since it could save a combined €7bn to €8bn.