BMW will offer fewer variants of its models in a bid to streamline manufacturing and offset high research and development (R&D) spending to the end of 2019, a top executive has said.
The German carmaker's finance chief Nicolas Peter told Reuters the automaker would spend between 5.5% and 6% of revenue on R&D in the next three years versus 5.5% in 2016. The group is developing electric, autonomous and connected cars as well as vehicles with combustion engines to meet more stringent emissions tests.
China's aggressive push to introduce electric car quotas also has forced European carmakers to accelerate the development and roll-out of electric and hybrid vehicles, pushing up their costs, the news agency noted.
"We have over 100 steering wheels on offer. Do we need that many variants?" Peter said.
He told Reuters BMW would drop manual gearshift variants of the BMW 2 series coupe in the US to cut down the cost of certifying components in each market and it has dropped manual shift options from entry level versions of the new 5 series diesel. It would also cut down the number of engine variants.
"In the [just redesigned] 5 series we have four diesel engines on offer. I would not bet on there being four diesel engines on offer in the next generation vehicle," Peter said.
Reuters said BMW continues with guidance for a slight increase in both vehicle sales and pre-tax profit tax this year as well as a margin on earnings before interest and tax (EBIT) of between 8 and 10%.
Sales have received a boost from the launch of a new BMW 5 series limousine, which has exceeded expectations, Peter said, without providing details.
The carmaker has seen double-digit sales growth in China and remains on track to keep this momentum with the launch of a long-wheelbase 5 series and a BMW X1, Peter said.
"There are some signals that the market is getting more difficult," Peter told Reuters, adding that order intake was slower and residual values were falling.
The US market may remain stable or even shrink slightly, Peter said, adding that BMW was working on cutting back vehicle inventory.
He also said the group had not yet decided where to build the next electric version of the Mini, though a decision would come this year, with Oxford remaining a contender for the manufacturing site.