BMW's Automotive Division profit falls more than expected

Berlin-BMW announced on Thursday that operating profit from its Automotive Division fell more than expected in the first quarter, pressured by price discounts in some European markets and technology costs.
The profit before interest and taxes (Ebit) shrank by 15.9 percent to 1.58 billion euros, slightly below the consensus market forecast of 1.6 billion in a Reuters poll. The operating margin fell to 9.9 percent, up from 11.6 percent a year earlier, while revenues from vehicles fell 1.6 percent to 15.91 billion euros.
"We did not expect to receive a big boost from most European markets over the next few months," said the Chief Executive, Norbert Reithofer. "Economic conditions in these areas should remain challenging. The business environment in which we are operating is becoming increasingly uncertain and volatile. " Still, the Munich-based company reaffirmed goal of having new record for vehicle sales in 2013. BMW also expects record profit this year even before tax from 2012 and have operating margin of between 8 and 10 percent in automotive operations.
The German luxury brands like BMW, Audi and Mercedes have fared better in the economic crisis than its European peers of the mass market, such as the Peugeot.
BMW reported that the prices of their vehicles in the first quarter fell at a rate greater than the estimated range for 2013 from 0.5 and 1 percentage point.
"Price trends are not positive, of course, and are weighing on margins," said Friedrich Eichiner, Vice President.