The auto industry is going through an interesting transformation. Increasing technology like autonomous drive systems and electric powertrains are changing the game. Automakers like BMW have poured considerable resources into transitioning quickly. As a result, BMW saw a 27 percent drop in Q3 operating profit.
BMW’s strategy is to stay at the front of the tech race. There’s a reason why the term “the bleeding edge of technology” exists. New tech isn’t cheap, and if any company invests in the wrong innovations, it can burn them in a hurry. It’s still too early to tell if that’s the future of BMW, but this single quarter’s earnings don’t look promising.
Tariffs have hit BMW hard, siphoning funds that would’ve fattened margins. A price war in the European market didn’t help, either. Another drag on BMW’s profits was the launch of the new X5, X7, and 8 Series.
The outlook of the auto industry isn’t good at the moment. If it plummets, the push toward advanced technologies could stumble or even implode. One of the factors tanking new car sales is the inflated cost of vehicles, even compared to just a few years ago. Ironically, all these advanced technologies have been a large cause of the price inflation. How BMW manages the situation will be interesting, but we might see some automotive icons fall in the coming years.