BMW downgrades profit forecast for 2018

BMW expects to achieve lower earnings than previously anticipated in 2018, the German luxury car manufacturer announced on Tuesday.

A spokesperson for the Munich-based company said the level of pre-tax profits would come in "moderately below the level of last year" instead of holding steady as predicted earlier. BMW further predicted that revenue and profit margins would decline slightly as well.

The DAX-listed company attributed its gloomier outlook to difficulties surrounding the recent introduction of new exhaust system testing standards, the need to offer more guarantees to customers, as well as a general deterioration in the automotive market due to global trade tensions.

As of this month, the so-called Worldwide harmonized Light vehicles Test Procedure (WLTP) has become legally-binding in the European Union (EU). Technological changes required to fulfill the standards have been associated with delays in production at several German car makers, and also led BMW rival Volkswagen Group to issue a profit warning.

BMW said on Tuesday that the transition to WLTP had witnessed an "unusually high intensity of competition" and distortion of market prices.

Many automotive producers in Germany tried to sell diesel vehicles which do not meet the new standards to customers at substantial discounts before the regulatory deadline of Sept. 1. As a consequence, new vehicle registries rose to record levels in August.

Aside from WLTP-related challenges, BMW has repeatedly complained about risks posed to its globalized business model by the imposition of new import tariffs.

Investors on the Frankfurt-based DAX stock exchange reacted unfavorably at the news of BMW's weaker earnings forecast. The Munich-based firm's share price plunged by up to 4 percent in Tuesday's trading.