German car manufacturer BMW is planning the largest investments in the company's history this year and is therefore expecting a slight decline in pre-tax profits, company executives said on Thursday.
Planned investments include the construction of battery factories in southern Germany, China, Mexico and the United States, as well as the construction of a new vehicle plant in Hungary and the launch of its New Class platform of all-electric vehicles, said Walter Mertl, the company's chief financial officer.
BMW is also investing in expanding its Munich plant and the electrification of a factory for British subsidiary Mini in Oxford, Mertl said.
Large investments in BMW's New Class platform are aimed at bringing electric vehicles up to the level of a combustion engine in terms of costs and profitability, Mertl said.
Mertl, speaking at the company's annual press conference, said investments and research and development costs for BMW are rising "to a new level."
Investments are expected to total more than 6% of turnover, while research and development spending will account for more than 5%, Mertl said.
Last year, BMW sold 2.55 million vehicles worldwide, generated €155.5 billion ($169.5 billion) in sales and €17.1 billion in profit before taxes, according to the company.
This year, car sales are expected to increase slightly, with all-electric and luxury cars as growth drivers, executives for the carmaker said.
As a result, turnover will also grow, said Mertl. He said that BMW is targeting a profit margin in its core business of between 8% and 10% of sales, in line with the 9.8% profit margin last year.
A further decline in the value of used cars is also likely to drag down profits for BMW as well, Mertl said, as the financial results from BMW's leasing division would fall.
