BMW had an excellent start to the year considering deliveries to customers rose by 2.5% to 530,933 vehicles. As a whole, the Group was up by 1.1% to 594,533 units, including those of the MINI and Rolls-Royce brands. However, higher sales don’t always equate to bigger profits because expenditures can increase at a higher rate than the volume of cars shipped to clients.

Revenue slightly dropped in Q1 2024 while the pre-tax margin decreased to 8.8%. BMW cites higher costs with research and development as well as with manufacturing. In addition, the German automotive conglomerate is spending more on personnel. Concomitantly, used car prices are decreasing, thus further hampering the company’s bank accounts.

Although automakers tend to mention rising R&D costs every chance they get, it must be true in this case. After all, BMW boss Oliver Zipse said this week that Neue Klasse is “the biggest single investment in the history of the company.” To support the arrival of new EVs, it’s building a factory in Debrecen, Hungary where the iX3 goes into production in 2025. In addition, the Munich-based marque is erecting five battery plants across the world.

It’s not just Neue Klasse products that are increasing bills. BMW continues to invest in cars powered by combustion engines. The next-gen X3 arrives in June and will be followed shortly by the 1 Series and 2 Series Gran Coupe. In the quarterly statement released this week, the world’s biggest luxury brand confirmed it’s working on the fifth-generation X5.

In the first quarter of the year, the BMW Group’s research and development expenses rose to $1.992 billion, or 10.4% more than in Q1 2023. Reuters cites Chief Financial Officer Walter Mertl saying: “The investments needed in the digital and electric future of our company are the highest they have ever been.”

Although more money is being spent on future models, some products reportedly won’t be renewed. We’re talking about the 4 Series, X4, Z4, and the 8 Series. These will allegedly be discontinued at the end of their life cycles.

Source: Reuters