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BERLIN—BMW AG’s automotive earnings plunged in the third quarter, as the luxury-car maker became the most recent victim of a confluence of economics and politics that is buffeting the global auto industry. Auto makers such as BMW, Daimler AG, Ford Motor Co., Fiat Chrysler Automobiles NV and Volkswagen AG are contending with several headwinds, including President Trump’s confrontational trade policies, uncertainty over Brexit, European efforts to combat global warming with ever tougher emissions rules and weaker demand for new vehicles in major markets. After years of easy profits and high growth, the German auto industry—one of Europe’s flagship sectors—also is facing longer-term structural challenges, such as technological shifts and the emergence of new competitors.
The world’s second-biggest luxury carmaker reported third-quarter earnings that missed expectations, striking a somber tone that contrasted with rivals Mercedes-Benz owner Daimler AG and Volkswagen AG. It’s too early to say whether things will look up in 2019, with the company preparing for trade wars, costs from Brexit, and “regulatory challenges,” Chief Financial Officer Nicolas Peter told reporters on a call. Return on sales from automaking, a key profit measure, nearly halved during the third quarter, hit by trade tensions, higher provisions and pricing pressure.
BMW (BMWG.DE) has beefed up its logistics to include air freight options as part of contingency plans to prepare itself for Britain's exit from the European Union, Chief Executive Harald Krueger said on Wednesday. "We have also taken measures to secure supply routes by air," Krueger said in response to a question about the carmaker's contingency plans to help ensure a smooth supply of components while politicians haggle over the terms of Britain's exit from the European Union. BMW hopes that Britain will remain part of the common market, but the Munich-based carmaker is making plans to prepare for a possible "hard Brexit", Krueger said on a conference call to discuss the company's third-quarter earnings.
AG (BMW.XE) on Wednesday confirmed its guidance as it posted lower third-quarter net profit after being hit by the effects of new emissions rules, the resulting pricing competition and global trade tensions. Net profit fell to 1.38 billion euros ($1.57 billion) in the quarter from EUR1.82 billion a year earlier. BMW said earnings before interest and taxes fell 27% to EUR1.75 billion from EUR2.38 billion.
SHANGHAI—BMW AG will assume majority control of its Chinese joint venture, becoming the first foreign auto maker to take advantage of Beijing’s easing of long criticized rules that limit foreign ownership in the sector. The German auto maker will pay €3.6 billion (about $4 billion) to increase its stake in its partnership with Brilliance China Automotive Holdings Ltd. to 75% from 50%. As part of the deal, the joint venture will significantly expand its manufacturing base in Shenyang in northeast China, BMW said in a statement Thursday.
AG said Thursday it agreed to increase its stake in its Chinese joint venture to 75% from 50% in a €3.6 billion ($4.1 billion) deal set to close in 2022. Ltd., also agreed to extend the contract of their BMW Brilliance Automotive Ltd. joint venture to 2040 from its existing expiration date in 2028, BMW said. BMW’s deal to acquire the additional shares in the venture needs to receive customary approval from authorities and the consent of Brilliance China’s shareholders, BMW said.
Just as a luxury crackdown takes hold and the auto market slows, the German carmaker has agreed to spend $4.1 billion to increase its stake in a venture with Brilliance China Automotive Holdings Ltd. to a controlling 75 percent. Despite widespread jitters, luxury car sales are doing reasonably well in China. While mass-market sales have fallen sharply, BMW Brilliance and Beijing Benz have managed to push up the average industry-wide pretax margin to 10 percent.
Germany's BMW said it will take majority control of its main China joint venture for 3.6 billion euros ($4.2 billion), the first such move by a global carmaker as Beijing starts to relax ownership rules for the world's biggest auto market. The luxury carmaker will lift its stake in its venture with Brilliance China Automotive Holdings Ltd to 75 percent from 50 percent, with the deal closing in 2022 when rules capping foreign ownership for all auto ventures are lifted. The move will likely spur BMW to shift more production to China, helping boost profits amid a whipsawing trade war between Washington and Beijing that has raised the cost of BMW importing cars manufactured at its South Carolina plant.
Germany’s ruling coalition pushed Volkswagen AG, Daimler AG and BMW AG to offer trade-in rebates for older diesel vehicles to avoid driving bans in urban areas and defuse a crisis that’s sullying the country’s reputation as an automotive leader. The plan was agreed by Chancellor Angela Merkel’s government after a meeting that ended in the early hours of Tuesday morning. The main focus of the measures is on trade-in offers in the most polluted cities, which will allow owners of models with Euro-4 and -5 emissions standards to purchase modern used models rather than just new cars.
BERLIN—Shares in BMW AG fell by as much as 6% on Tuesday after the luxury car maker warned that emissions-related costs, product recalls and fierce price competition amid global trade disputes would dampen profit this year. BMW said the main reason for the dimmer outlook was the cost of adjusting to new global rules for emissions testing to measure pollutants, greenhouse gas emissions, and fuel economy. The test, called world harmonized light vehicles test procedure, or WLTP, came into force in Europe in September and BMW racked up significant costs earlier in the year to adapt its vehicles to the new regime.
The German company said the effects of new emissions testing regulations in Europe, increased provisions, and ongoing global trade tensions would pinch revenue and earnings this year. BMW got its vehicles ready for new European emissions-testing rules in time but the changeover has led to increased competition that could ultimately hit sales. The switch to the new emissions rules which came into effect this month “led to significant supply distortions in several European markets and an unexpected intense competition,” BMW said.
BMW AG cut its profit forecast, becoming the latest carmaker to succumb to pressures ranging from trade wars to scrutiny on emissions. International trade conflicts are making consumers skittish, eating into demand more than it expected when it first warned on its profit goals in early August, BMW said Tuesday in a statement. “The continuing international trade conflicts are aggravating the market situation and feeding uncertainty,” BMW said.
BMW AG is bringing forward the scheduled maintenance of its Oxford plant in England to coincide with the day the U.K. is slated to leave the European Union, joining a lengthening list of companies making contingency plans for a so-called no-deal Brexit. Instead of taking place as usual during the summer months, the four-week shut-down of the factory will start on April 1, a spokeswoman confirmed over the phone to Bloomberg. Among the reasons for the date switch are worries about Brexit, she said.