BMW Forced To Lower Profit Outlook Due To Trade Tensions And Price Wars

Industry News

We wouldn't be surprised if other automakers are hurt as well.

2018 was expected to be a tough year for BMW, and this prediction has turned out to be true according to the company's latest financial projections. BMW says it will not reach its expected pretax profit and has lowered its profit margin projections. This decision comes in light of intense price wars and more strict emissions regulations. We've already seen trade tensions heat up between the US and China as well as the repercussions from the new WLTP emissions regulations with several cars being discontinued, including the Volkswagen Golf GTI in Europe.

BMW was even forced to end production of the current F80 M3 due to the new WLTP regulations. These new rules have "led to significant supply distortions in several European markets and an unexpected intense competition. Thanks to its flexible production and sales strategy, the BMW Group is responding to this increased competition and is reducing its volume planning to focus on earnings quality" BMW said in a statement.

The company will still make a profit in 2018, but it will be lower than expected. Instead of earning an 8-10% profit, BMW is now expected to have a profit of 7%, which is the same as in 2017 and inline with the rest of the automotive industry.

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In addition to the new emissions regulations, BMW also has its hands full dealing with trade tensions. "The continuing international trade conflicts are aggravating the market situation and feeding uncertainty. These circumstances are distorting demand more than anticipated and leading to pricing pressure in several automotive markets" BMW said.

BMW currently builds many of its cars in the US and Germany but will build the upcoming iX3 electric SUV in China. The ongoing trade tensions will be something to monitor and we wouldn't be surprised if other automakers faced similar challenges.

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