(Bloomberg) -- BMW AG will more than double sales of lucrative X7 sport utility vehicles and luxury cruisers to fight flagging profits and make the costly shift to electric cars.
Next year, the company plans to deliver between 135,000 and 145,000 of 7-Series sedans, 8-Series sports cars, as well as the X7 SUV, M8 performance coupe and i8 plug-in hybrid sports car, BMW Chief Financial Officer Nicolas Peter said Thursday.
That’s up from about 65,000 last year, which is expected to grow to roughly 110,000 vehicles this year. The jump is largely thanks to the X7, which hit dealerships in March and comes with a standard 340-horsepower engine and options including a 4.4-liter V8.
“The important topic for us is how do we get our profitability up,” Peter told reporters in Munich, emphasizing growing i3 electric car sales in light of criticism leveled at SUVs as gas guzzlers. “This is a worldwide growing segment.”
BMW is in the middle of a 12-billion euro ($14 billion) cost-cutting drive to combat rising costs in the shift to electric cars, with demand wobbles adding to the challenges of executing the industry’s generational transformation. BMW’s second-quarter operating profit tumbled 20%, against a backdrop of surging capital expenditures for retooling factories to switch between battery-powered and conventional vehicles.
The global car market is performing “worse than expected” as economies slow this year, according to Peter, who still sees the premium segment and BMW sales to rise next year.
Tensions over how to execute the electric-car shift already toppled former BMW Chief Executive Officer Harald Krueger after just one term, with former production head Oliver Zipse taking the helm in August. Zipse foresees a gradual increase in demand for electric cars, making a flexible production setup pivotal. The company plans to have 25 electric and hybrid models by 2023, with over half of those being fully electric.
BMW was “committed” to reaching tough new rules in the European Union from next year on carbon dioxide fleet emissions, he said.
Deliveries for the company have held up comparatively well, thanks to a record new and revamped models to rise 1.9% through August. The company, also facing fallout from a potential hard Brexit at its Mini city car plant in the U.K., expects earnings before tax for the year to fall “well below” 2018 levels. It’s due to report third-quarter earnings Nov. 6.
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