* BMW pushes offroaders to pay for electric car rollout
* BMW preparing to make electric cars in China
* Won't chase luxury market leadership at any cost
(Adds BMW CEO and board member comments)
By Edward Taylor
MUNICH, March 21 German carmaker BMW
plans to increase output of profitable sport-utility vehicles
(SUVs) to boost earnings this year and help fund the rollout of
a mass production system for electric cars, it said on Tuesday.
BMW Group and rival Mercedes have both forecast that demand
for electric and hybrid cars will rise to 15-25 percent of sales
by 2025, forcing them to overhaul their production lines and
vehicle platforms to accommodate mass production techniques.
"The fully electric drivetrain will be integrated into our
core brands," CEO Harald Krueger told a news conference at BMW's
headquarters in Munich to discuss the group's annual earnings.
Only 2.6 percent of the 2.37 million cars BMW Group sold
last year equipped with a hybrid or electric motor. The group
also includes Mini and Rolls-Royce brands.
Electric car production will now be integrated into BMW's
main production system, rather than relying on a separate,
low-volume electric car factory in the eastern German city of
Leipzig, the carmaker said.
"To achieve this we are now gearing our architectures
towards combustion engines and pure battery electric
drivetrains," Krueger said.
Even local production in China is being prepared to make
batteries and electric powertrains, BMW said, adding the level
of production would be decided once China's electric cars policy
has been clarified.
The cost of integrating electric cars into mass production
as well as investments in self-driving cars, such as the
building of a research centre near Munich, will cause
investments to rise, the carmaker added.
"Due to necessary upfront investments, the research and
development ratio for the next two years is likely to be
slightly above our target range of 5 percent to 5.5 percent (of
revenues)," Chief Financial Officer Nicolas Peter said.
Earlier this month, BMW reported preliminary 2016 financial
results, with earnings before interest and tax (EBIT) down 2.2
percent at 9.39 billion euros ($9.9 billion) even as revenues
rose to a record 94.16 billion euros.
Every third BMW car built last year was an SUV, a market
that is growing so fast the company is increasing production
capacity and adding an X2 and an X7 to its lineup in 2018.
BMW's core brand, long the world's top selling luxury
automaker, sold fewer cars than German rival Mercedes-Benz
The company said on Tuesday it would look to recapture that
lead by launching more than 40 new or revised models in the next
two years, but not by chasing Mercedes at all costs.
"The future competitiveness is reflected in a combination of
several performance indicators: not just sales figures, but also
profitability, capacity to innovate, flexibility and
attractiveness as an employer," Krueger said.
The Munich-based carmaker is increasingly focused on finding
out how to stay relevant with an audience that does not want to
own a car, Peter Schwarzenbauer, board member responsible for
digital business, said.
BMW Group, which includes BMW car and motorbikes as well as
the Mini and Rolls-Royce brands, has reached about 30 million
customers through the sale of cars. By 2025 BMW wants to
increase that customer base to more than 100 million with the
help of digital services such as ride hailing.
BMW is targeting a slight rise in sales volume, revenues and
group pretax profit this year, with a return on sales of 8-10
percent in the automotive business.
The fact that BMW is sticking to its profit targets despite
facing a steep investment bill could make BMW shares a good
investment, analysts at Evercore ISI said in a note on Tuesday.
"BMW shares have underperformed Daimler by around 10 percent
since mid Feb this year. It looks like this can revert,"
($1 = 0.9263 euros)
(Reporting by Edward Taylor; Editing by Mark Potter and Keith