* BMW says to embark on new round of cost cuts
* BMW says to save hundreds of millions of euros
* BMW seeks 3-4 bln euros in annual savings -magazine
* CEO has asked McKinsey to review costs -magazine
(Recasts, adds BMW statement clarifying cost cuts amount to
hundreds of millions)
By Edward Taylor
FRANKFURT, June 18 German luxury auto maker BMW
on Wednesday said it plans to save several hundred
million euros in annual costs to offset higher expenses for
investments to meet tougher emissions standards and develop new
electric and hybrid cars.
The world's largest luxury carmaker has promised higher
profits and sales for 2014 but faces rising expenses as it rolls
out new models, expands its production capacity, and adapts to
tougher environmental rules.
In a statement on Wednesday, BMW said in order to remain
competitive amid rising costs, the Munich-based manufacturer
would seek to lower annual expenses "by several hundred million
euros a year."
Earlier this year, German manufacturers balked at new
European Union anti-pollution rules which demand that average
emissions are cut to 95 grams of carbon dioxide per kilometre
from a current limit of 130 grams.
The European Commission, the EU executive, proposed the
target should apply from 2020, but full implementation has been
delayed for a year following months of negotiation.
BMW's European fleet had average CO2 emissions of 133 grams
per kilometre in 2013.
The cost of investing in new cars, including a new
generation of the Mini, as well as a raft of smaller models such
as the 2-series, lowered BMW's automotive EBIT margin to 9.4
percent in 2013, from 10.8 percent in the year-earlier period.
In the first quarter BMW's automotive EBIT margin, the best
gauge to compare profitability with peers, was 9.5 percent,
higher than the 7 percent achieved by rival Mercedes-Benz Cars
but short of the 10.1 percent achieved by Audi.
BMW's renewed focus on costs comes after key rival Daimler,
which makes Mercedes-Benz cars, said in April it would seek more
cost cuts to narrow its profitability gap with peers.
Germany's Manager Magazin on Wednesday reported that BMW
would embark on a new round of cost cuts to achieve annual
savings of between 3 to 4 billion ($4-5.4 billion), citing
A BMW spokesman declined to comment on the report other than
to say, "Generally speaking we are continually watching our
costs, and seek to maintain and enhance our international
competitiveness. We seek to achieve a sustainable EBIT margin of
between 8 and 10 percent, our strategy is based on this profit
Despite record sales and earnings in 2013, Chief Executive
Norbert Reithofer is disappointed with the cost structures at
Mini and the smaller BMW models, the magazine said.
For 2014 the auto maker wants to lower spending on research
and development and focus on efficiency in an effort to achieve
a "significant rise" in pretax profit.
Earlier this month, the Munich-based maker of BMW,
Rolls-Royce and Mini cars said it was reviewing the cost
structure at individual factories as part of a process of
deciding whether they were still competitive.
($1 = 0.7383 Euros)
(Reporting by Edward Taylor; Editing by Elaine Hardcastle and