BMW on Wednesday reported a 133% rise in first-quarter operating profit, due to the absence of a one-off provision in the year-earlier period, but said the impact of the coronavirus could erode demand and profit.
Earnings before interest and taxes rose to 1.38 billion euros ($1.50 billion) versus 589 million euros in the same period a year earlier. Its earnings before interest and taxes (EBIT) margin for its autos division reached 1.3% from a negative 1.6% margin in the year-earlier period.
The Munich-based firm late on Tuesday forecast a full-year automotive EBIT margin of 0% to 3%, versus the 2% to 4% range estimated before demand was decimated by government restrictions on movement worldwide aimed at slowing the coronavirus outbreak.
BMW's results are the latest indication of deteriorating profitability at legacy automakers, which are spending huge sums to clean up combustion engines in the face of increasingly stringent emissions regulations as well as rising competition from electric vehicle specialist Tesla.
Last week, Tesla said its automotive gross margin rose to 25.5% in the first quarter from 20.2% a year earlier, due to a 40% rise in deliveries, helped by demand for its Model Y crossover utility vehicle.
By contrast, BMW's deliveries fell 20.6% to 477,111 cars in a quarter blighted by the impact of the coronavirus, which was first reported in China at the end of last year.
Margins have come under pressure as customers shifted towards buying petrol-guzzling sport-utility vehicles (SUVs) at a time when emissions rules are getting more stringent.
Sales of BMW's "X" series of SUVs jumped 21% last year, making up 44% of the BMW brand's global total. That has forced the automaker to increase spending on hybrid petrol-electric and pure electric vehicle technology to meet emissions rules.
Carbon dioxide emissions from new vehicles sold in the European Union must be 40% lower in 2021 compared with 2007, and 37.5% lower in 2030 versus 2021 - with fines for non-compliance.
BMW's 2021 target is an EU fleet average of 102.5 grams of CO2 per kilometer. Last year, its average fell just 1 gram from a year earlier to 127 grams, while research and development spending left its automotive EBIT margin at 4.9%.
Before the rules' 2018 introduction, the margin stayed above 8% for 33 consecutive quarters.
Investment in electrification added to Brexit uncertainty and trade war impact, prompting BMW to announce a 12 billion euro cost-cutting plan in March last year.
Two months later, BMW cut its automotive EBIT margin target to 4.5% to 6.5%, from 8% to 10%, as it set aside funds to fight allegations of collusion in emissions filtering technology.