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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.

Rolls-Royce teases Wraith debut in Geneva

Rolls-Royce is headed to the 2013 Geneva Motor Show with a new addition to its lineup: the Wraith. The ultra-luxury automaker says it plans to start deliveries by the fourth quarter of this year, though details are scarce at the moment. The automaker has contented itself with saying the Wraith will the "most dynamic, powerful and beautiful Rolls-Royce in the company's history." We hear it will be the most modest, too.
Rolls-Royce first began using the Wraith nameplate in 1938. The original car used a tweaked version of the 4.3-liter inline six-cylinder found in the company's 25/30, but its real claim to fame came from the fact that it boasted speed-variable hydraulic dampers. Capable of reaching speeds of up to 85 miles per hour, Rolls-Royce only built 492 examples of the vehicle's chassis.
You can look for the new Wraith to bow at the Geneva Motor Show in March. In the interim, check out the shockingly bare press release below and get ready for a spate of teasers to follow.

Rolls-Royce considering carbon coachbuilding?

There's any number of applications in which you might expect to find carbon fiber on an automobile, but a Rolls-Royce is not one of them. That could change in the near future, however, as the super-luxe auto marque is reportedly looking into using the lightweight material on a range of special models.
The idea, according to Edmunds, would be to rebody certain models in carbon fiber as a sort of in-house coachbuilding operation for discerning customers looking for something a little different from what the neighbors in the next mansion or ivory tower over have in their gold-paved driveway. While the carbon-fiber bodywork might help shave off some of the weight from a range of cars that tip the scales at 5,500 pounds or more, the principal notion here is exclusivity.
The business case for these bespoke automobiles apparently stems out of two developments. For one, the vast majority - over 90 percent - of Rolls-Royce customers opt for some manner of customization or another. For another, parent company BMW has been working hard to reduce the cost of carbon-fiber production in particular for the new i3, and that expertise could turn these premium-priced creations a greater cash cow for Rolls-Royce than the development of a sport-utility vehicle ever could.