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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.

2017 BMW 3 Series GT update includes two new engines

BMW has treated the hatchback 3 Series Gran Turismo (not to be confused with the hatchback 4 Series Gran Coupe) to some updates for the 2017 model year. The biggest change is the introduction of the company's latest four- and six-cylinder engines, but along with them come some updates to appearance and equipment. Of the 18 powertrains BMW will offer globally in the 2017 3 Series GT, the United States will once again receive only two. Both of the new 3 GT engines come from BMW's latest modular engine architecture, which spits out three-, four-, and six-cylinders. Replacing the previous 328i Gran Turismo is a new 330i, powered by a 2.0-liter turbocharged inline-four good for 252 horsepower (instead of 240) and 258 pound-feet of torque (up modestly from 255). The outgoing 335i is replaced by the new 340i, with a 3.0-liter turbo six rated at 326 hp and 332 lb-ft, up from an even 300 hp and 300 lb-ft for the outgoing 3.0-liter six. Both models come standard with xDrive all-wheel drive and an eight-speed automatic as before. The 340i and its new engine have already made it to the refreshed 3 sedan launched last year, while the 330i and its four-cylinder are not yet part of the sedan or wagon lineup (or the 4 Series, for that matter). We expect the engine and name change to migrate to them in the next year or so. In addition to the engine updates, the 2017 3 GT also receives visual tweaks like those on the 2016 sedan, including new LED headlights, taillights, daytime running lights, and fog lights. Matte chrome exterior trim now comes standard, and there's a new rear bumper design. The interior gets chrome accents and a few other changes that we found helped make the sedan feel a bit more rich, fixing the downmarket feel of the early 3s of this generation. The latest iDrive infotainment, version 5.0, is also included with the navigation option. Buyers will again be able to select from a variety of option bundles including Luxury, M Sport, Lighting, and Cold Weather packages. The car's structure remains unchanged, which means the same hatchback body and longer wheelbase that bridge the gap between the sedan and wagon. It's a style-practicality compromise that continues to be polarizing, but at least the 3 gives you options. Related Video: The new BMW 3 Series Gran Turismo. BMW is preparing to launch the latest BMW 3 Series Gran Turismo in time for the start of summer.

BMW i3 to be priced around $40,000

According to Automotive News, the BMW i3 electric hatchback will likely be priced around $40,000, or similar to that of a well-equipped 3 Series sedan, when it goes on sale later this year. This information was revealed during an interview where AN spoke to Ludwig Willisch, CEO of BMW North America. The i3 will likely qualify for a $7,500 tax credit from the US federal government, though AN reports that a BMW spokesperson could not confirm this just yet.
In addition to the all-electric i3, BMW will offer a range-extended version that uses a 0.65-liter two-cylinder motorcycle engine and auxiliary generator to charge the car's battery on the go. Automotive News says pricing for this model is still unclear, as is whether or not the range-extended i3 will be eligible for the $7,500 tax credit. Of course, buyers needing a vehicle for longer trips will be able to borrow one from the automaker.
Automotive News also reports that the majority of BMW's 338 dealers in the United States will be able to sell the i3, as well as the upcoming i8 hybrid sports car. Dealerships have until June of this year to opt out of this program, however.