BMW stalls as 2018 profit target slips further away
The German car maker is blaming intense price competition in the wake of new emissions rules
Frankfurt — On Tuesday, German car maker BMW said it would not meet its full-year target of achieving a flat pretax profit and lowered its profit margin guidance for cars, blaming intense price competition in the wake of new emissions rules.
BMW's shares fell 3.9% after the car maker joined rival Daimler and a raft of suppliers who, earlier in 2018, blamed a global trade conflict and a price war triggered by new emissions rules for hurting profits.
The industry-wide shift to the new Worldwide Harmonised Light Vehicle Test standards (WLTP) in September has led to significant supply distortions in several European markets and unexpectedly intense competition, BMW said.
As a result, full-year pretax profit is expected to moderately decrease, rather than remaining on par with 2017's level, BMW said.
The operating margin in the automotive segment is now expected to be at least 7%, rather than in line with the previously stated group target corridor of at least 8%-10%, BMW explained.
In August BMW affirmed its full-year targets but analysts at Evercore ISI noted on Monday that they doubted BMW's ability to meet its full-year pretax profit target.
The introduction of WLTP forced car makers to withhold some nonconforming models from sale, prompting these car makers to push other models with discount strategies so they could maintain market share.