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BMW warns profits will fall, plans $13.6 billion in cost-cutting

FRANKFURT, Germany — BMW said Wednesday that profits in 2019 will be "well below" last year's, and it will cut 12 billion euros ($13.6 billion) in costs by the end of 2022 to offset spending on new technology. The company said profits would be eroded by higher raw materials prices, the costs of compliance with tougher emissions requirements and unfavorable shifts in currency exchange rates. The Munich-based automaker also faces increased uncertainty due to international trade conflicts that could lead to higher tariffs. "Depending on how conditions develop, our guidance may be subject to additional risks; in particular, the risk of a no-deal Brexit and ongoing developments in international trade policy," said Chief Financial Officer Nicolas Peter. The company forecast a profit margin of 6 to 8 percent for its automotive business, short of the long-term strategic target of 8 to 10 percent, which it said still "remains the ambition" for the company if given "a stable business environment." BMW said it had no plans for layoffs even as it outlined cost saving measures that include dropping half of its engine variants as it seeks to reduce product complexity. The BMW, Mini and Rolls-Royce brands are to get a single sales division. Peter said that given the headwinds to earnings, "we began to introduce countermeasures at an early stage and have taken a number of far-reaching decisions." The company said the measures were needed "to offset the ongoing high level of upfront expenditure required to embrace the mobility of the future." Automakers around the world have faced heavy up-front costs for technology expected to change how people get from one place to another in the next decade. Those include electric cars and renting cars through smartphone apps. Yet the returns from such investments remain uncertain and auto companies face competition from tech firms such as Uber and Waymo. BMW made 7.2 billion euros ($8.2 billion) in net profit last year, down 17 percent from 2017, when it booked a gain of $1 billion from U.S. tax changes. The company faced headwinds from increased tariffs on vehicles exported to China from the United States. It also suffered from turmoil on the German auto market when companies faced bottlenecks getting cars certified for new emissions rules. BMW faces uncertainty from U.S.-China trade tensions that could result in new tariffs if talks do not result in an agreement. U.S.

Lexus to use BMW 3.0-liter straight-six in next-gen IS sedan?

Here's a rumor so wild it needs a U.S. Fish and Wildlife permit. Japan's Best Car magazine reports that the next-generation Lexus IS will offer BMW's B58 3.0-liter inline-six as one of four powertrain options. That's the same engine found in the new Toyota Supra with 335 horsepower and 365 pound-feet of torque. What's more, the fourth-gen IS will resurrect the IS F model gone AWOL during the current third generation, and do it with the twin-turbo V6 from the Lexus LS 500. The current TTV6 makes the same 416 hp in the LS 500 as the 5.0-liter V8 did in the first Lexus IS F 12 years ago. According to the magazine, the other engine options would be Toyota's 2.0-liter turbocharged four-cylinder, a 2.5-liter for a hybrid model, and a 2.4-liter turbo. We don't know where that last engine fits in. BMW doesn't make a 2.4-liter, and Toyota appears to have retired all of its 2.4-liter applications. Ignoring that, the 3.0-liter straight-six looks like it would replace the current 3.5-liter V6 rated at 311 hp and 280 lb-ft. This wouldn't be the first time the Supra's engine has been ported to the IS. Lexus mavens will remember that two years after the introduction of the original IS in 1998, Lexus put the Supra's 2JZ 3.0-liter straight-six engine in the IS 300 — without the turbochargers, thank you. But Best Car's prediction would have zero relation to history. Those were both Toyota engines back in 2000, and even ignoring the power differential, the IS didn't compete with the Supra. Putting BMW's 3.0-liter in the Z4 and the Supra works because they are the same car. And again, even ignoring the power differential, the more powerful Z4 doesn't compete with the Supra. Best Car's scenario has BMW selling one of its best engines for use in a direct competitor to the 3 Series. Lexus would need to design an engine bay long enough to swallow an inline-six, not a bread-and-butter engine for the brand, yet still be sensible for three more compact powerplants. Then, assuming BMW and Toyota made the same deal as with the Z4 and Supra, the Lexus would be down by a healthy double-digit horsepower margin on its German foe. The new Supra gives up 47 hp to the roadster. Where's the upside? It's said the trim sedan will stay about the same size, on a wheelbase roughly four centimeters longer, but lose a substantial chunk of weight.

BMW makes X7 in Spartanburg official

BMW has made it official - there will be a flagship crossover called X7, and it will be built right here in the US of A. The announcement was made today, confirming rumors of the new model at the Spartanburg, SC factory that broke earlier this week.
"Plant Spartanburg was built to enhance and expand the BMW lineup, underscoring the BMW Group commitment to the United States" said Dr. Norbert Reithofer, chairman of the BMW board of management in a statement. "In addition to the X3, X5, X6, and the new X4, we are today announcing another all-new, larger X model to be manufactured exclusively at this plant for our world markets: the X7."
BMW will spend $1 billion by 2016 upgrading its South Carolina factory, which already produces the X3, X5 and X6. The plant is currently capable of producing 300,000 units per year, but with the big investment from BMW, capacity will climb to 450,000 units. 800 jobs will be added as a result of the investment and new and upcoming models.