MUNICH -- BMW CEO Harald Krueger defended his track record at the company's annual meeting, highlighting its luxury lead in the U.S. and growing sales through a Chinese downturn, as the carmaker battles to reverse falling margins.
BMW is struggling alongside many other carmakers with a downturn in demand and record spending after years of growth. After a profit warning last year, the world's second-biggest luxury carmaker after Mercedes-Benz had a tough start to the year, reducing momentum from an unprecedented model offensive to a whimper. That and BMW squandering an early lead in electric cars is putting pressure on Krueger to prove his strategy.
"I am certain that we can continue our successful development -- especially now that our model offensive is bearing fruit," Krueger said in prepared remarks to shareholders at the company's annual meeting on Thursday. "Your company remains strong, through both calm and stormy times."
The automaker reported its first loss in a decade in the main automotive division in the three month through March, after booking a 1.4 billion euro provision ($1.6 billion) for potential European Union fines over collusion. Even excluding this charge, the unit's return on sales dropped to the lowest point in 10 years.
"Where is this model offensive?" German shareholder association Vice-President Daniela Bergdolt said in her speech to loud applause from shareholders. "Sure, you've got the iNEXT, but I was expecting something that blows Tesla out of the water."
Krueger has pledged to retake the premium car sales crown from Mercedes by 2020 after losing the top spot in 2016. In the year through April, Mercedes led BMW on global deliveries by a margin of 52,340 cars, with BMW sales gaining 0.8 percent and its rival falling 5.6 percent. Mercedes also remained ahead in China.
BMW moved early in electric cars among major carmakers with the electric i3 in 2013 but paused putting more battery-only cars on the road after sluggish sales until this year, when it will unveil an electric Mini. Meanwhile, Jaguar, Mercedes and Audi have started sales of a fresh generation of battery-powered SUVs.
While Volkswagen, Mercedes-Benz maker Daimler and Audi are investing into electric cars "at full speed, BMW is traveling in Munich with the handbrake on," Union Investment fund manager Janne Werning said.
EV caution
BMW plans 12 electric cars by 2025. Krueger defended his cautious approach on Thursday, saying no one knew how fast electric cars would take over or which technology was set to win out. BMW's stance contrasts with Volkswagen's 30 billion-euro ($34 billion) electric onslaught for 70 models by 2028, with BMW producing hybrid and battery cars on the same production lines as combustion vehicles because it lacks VW's economies of scale.
"I do not believe it would be wise, from a business perspective, to put all our eggs in one basket," Krueger said, highlighting plug-in hybrid vehicles and fuel-cell cars as alternatives.
Krueger announced a 12-billion-euro savings program in March by culling models and reducing drivetrain options. For the second half the year, BMW expects business to improve thanks to models like the revamped 3-series sedan and the new full-size X7 SUV.
There has been little let-up in the pressure that's been intensifying due to the U.S.-China trade spat dragging on the global economy, and unprecedented spending demands for the transformation to electric cars. President Donald Trump is poised to delay a decision on tariffs on cars imported from the E.U. by up to six months, people familiar with the matter said Wednesday.
Though BMW investors have voiced criticisms, there is little risk of a revolt. Quandt family members Susanne Klatten and her brother Stefan Quandt own 45 percent of the company's shares.
