FRANKFURT--German carmaker BMW warned its pretax profit would fall this year, against earlier expectations for a flat outcome, and cut its profit margin guidance for cars, blaming intense price competition following new emissions rules.
BMW's shares fell 3.9 percent after the automaker joined rival Daimler and a raft of suppliers which earlier this year blamed a global trade conflict and the introduction of anti-pollution standards for hurting profits.
BMW is ahead of its peers Volkswagen and Daimler in terms of selling cars that conform to the new Worldwide Harmonised Light Vehicle Test standard (WLTP), but the onset of the rules has led to supply distortions and unexpected price competition, it said.
The introduction of WLTP has forced some carmakers to withhold non-conforming models from showrooms, prompting them to discount other models to defend their market share. European car registrations surged 29.8 percent last month.
International trade tensions, which have given rise to import tariffs, are also fuelling market uncertainty, BMW said. As a result, full-year pretax profit is expected to moderately fall, rather than remain on a par with last year.
The operating margin in BMW's automotive division is now expected to be at least 7 percent, rather than in line with the group's target corridor of at least 8-10 percent, BMW added. "This profit warning comes as a surprise but that is because market conditions have changed," said NordLB analyst Frank Schwope, who still has a "buy" rating on BMW shares.
