FRANKFURT, Germany (AP) – German luxury automaker BMW AG saw net profit slip 1 percent in the second quarter amid higher launch costs for new vehicles as key models approach the end of their life cycle, the company said Tuesday.
The company also cautioned it was facing a tougher market in China, a major pillar of its profits.
Net profit fell to 1.749 billion euros ($1.9239 billion) from 1.767 billion euros in the April-June quarter of last year.
Munich-based BMW also said it sold a less profitable mix of vehicles, containing more compact cars that typically have lower profit margins.
Key BMW models such as the 5 Series and 7 Series sedans are nearing the end of their life cycle, which can hurt sales as customers see newer products from competitors. The company has already unveiled a new 7 series, which will go on sale this fall.
Renewing models is costly but pays off if the new version sells better than its competitors. BMW faces tough competition for luxury car sales from Daimler AG’s Mercedes-Benz and Volkswagen AG’s Audi.
The company also cautioned that the Chinese market – a source of rich profits for German carmakers in the past several years – is “normalizing” and becoming more competitive. BMW sales there slipped 1.4 percent in the quarter. Chinese growth has slowed in recent months.
BMW sales boomed 20.2 percent to 23.935 billion euros, thanks to record numbers of vehicles sold around the world but also strongly boosted by currency exchange rate shifts.