BMW 7-series<\/strong><\/span><\/p>\n

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B<\/span>ERLIN (Reuters)<\/strong> – Rising costs for new models and technology will weigh on profits at BMW\u00a0for the rest of the year, it said on Tuesday, as the German carmaker battles to recapture ground lost to rival Mercedes-Benz .<\/span><\/p>\n

BMW, the top seller of luxury cars for more than a decade, was overtaken by Mercedes last year, and its third-quarter operating profit fell 3 percent as it invests in catching up.<\/span><\/p>\n

The company, which is spending money on electric and self-driving technologies while also upgrading its line-up of conventional models, said upfront costs for the redesigned X3 sport-utility vehicle, due to hit showrooms this month, and the all-new X2 and X7 models would weigh on fourth-quarter results.<\/span><\/p>\n

\u201cSignificant advance payments on R&D (research and development) will be necessary at present and in the coming years,\u201d finance chief Nicolas Peter said during results call.<\/span><\/p>\n

He predicted a \u201cchallenging\u201d fourth quarter, echoing Volkswagen\u2019s (VOWG_p.DE<\/span>) Audi brand which is also refreshing its line-up of high-end and compact models.<\/span><\/p>\n

BMW shares were down 2.7 percent to 87.53 euros at 1340 GMT, the biggest drop on Germany’s benchmark DAX.GDAXI\u00a0index.<\/span><\/p>\n

\u201cBMW used to be in a league of its own but these days it faces a totally different level of competition from Mercedes, Audi and Land Rover (TAMO.NS<\/span>), plus a load of other rebooted smaller players and of course Tesla (TSLA.O<\/span>),\u201d said Bernstein analyst Max Warburton.<\/span><\/p>\n

Spending on R&D at the BMW group, which includes the Mini and Rolls Royce brands as well as its namesake cars, jumped over a fifth in the first nine months of this year to 4.1 billion euros ($4.7 billion), Peter said. Third-quarter operating group profit fell to 2.3 billion euros, near the lowest 2.28-billion-euro forecast in a Reuters poll of analysts.<\/span><\/p>\n

As a result, BMW\u2019s operating margin slipped to 8.3 percent in the July-to-September quarter from 8.5 percent a year earlier, within its 8-10 percent target range but below Audi\u2019s 8.9 percent and 9.2 percent at Mercedes. \u201cBMW\u2019s competitive environment has changed and that\u2019s evident in these Q3 numbers,\u201d Warburton said.<\/span><\/p>\n

Follow us on Twitter for more Logistics News<\/a><\/strong>\u00a0 \u00a0 \u00a0 \u00a0 \u00a0\u00a0Follow us on Facebook for more Logistics News<\/a><\/strong><\/p>\n

Despite a 5.9 percent drop in quarterly pre-tax profit, BMW nudged up its full-year outlook to a 5-10 percent rise from 1-5 percent previously, thanks to a strong first-half performance. Helped by strong demand for the redesigned 5 Series, BMW\u2019s second best-selling model, and an upgraded 4 Series, it forecast a \u201cslight\u201d increase in deliveries to a new record this year.<\/span><\/p>\n

But it pared back revenue expectations, forecasting sales at its core automotive operations to grow by 1-5 percent amid exchange rate headwinds and political volatility, down from 5-10 percent previously.<\/span><\/p>\n

With report from Reuters<\/strong><\/span><\/p>\n

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