BERLIN -- BMW's third-quarter profits were hit by investments in new technologies and new models. Third-quarter pretax profit declined 5.9 percent to 2.42 billion euros ($2.81 billion), BMW said in a statement on Tuesday
Earnings before interest and taxes (Ebit) fell 3.2 percent to 2.3 billion euros. Operating profit margin slipped to 8.3 percent in the quarter from 8.5 percent a year earlier, within its 8-10 percent target range but below Audi's 8.9 percent and the 9.2 percent at Mercedes-Benz.
BMW is adding upscale models such as the 8-series coupe and X7 SUV to regain momentum in its tussle with Mercedes-Benz for the lead in the global luxury-car market.
It's also spending money to accelerate a rollout of at least 12 battery-powered vehicles by 2025 to pull at least level with Mercedes's 10 billion-euro ($11.6 billion) plan to create electric autos. BMW plans to offer a convertible version of the electric i8 Roadster next year.
High battery costs and reticent consumers are setting carmakers on course for a period of lower returns as they develop the models to meet tightening environmental rules.
"Significant upfront investment on research and development is necessary, both now and in the coming years," Chief Financial Officer Nicolas Peter said in the statement.
CEO Harald Krueger said: "Our priority is the long-term perspective. For this reason, we are investing substantially in all relevant future areas of mobility."
For the full year, BMW raised its profit outlook, counting on demand for new models and cuts in development spending. The automaker forecast a 5-10 percent gain in pretax profit, raising a previous forecast of 1-5 percent. BMW pared expectations for revenue gains, forecasting sales in core automotive operations to grow by between 1 and 5 percent amid currency headwinds and political volatility.
New vehicles are stoking demand, including its redesigned 5 series, BMW's second best-selling model, and an upgraded 4 series which came to market this year. The overhauled X3 SUV hits dealerships this month.
BMW, which has been pushing cuts in development costs by restricting parts complexity, said it still expects a rise in deliveries to a new record this year.
Juergen Pieper, an analyst at Bankhaus Metzler in Frankfurt, said BMW’s quarterly performance was "weakish," pointing out that the boost to the overall guidance largely feeds from a strong first-half. "Compared to its key competitors, the result was less strong," he said.
BMW's results cap quarterly earnings for the three major German automakers in an industry that’s still battling fallout from Volkswagen Group's two-year-old diesel-emissions cheating scandal.
Adding to the struggles, the European Union is proceeding with a preliminary probe into allegations that VW, Mercedes parent Daimler and BMW colluded for decades on technology, and it arranged searches of carmakers' offices last month. Both VW and Daimler informed authorities of the industry talks in the hope of escaping potential fines, leaving BMW wrong-footed and casting a cloud over future cost-saving cooperation.
VW Group last week lifted its 2017 earnings forecast after a 15 percent rise in quarterly earnings because of robust demand for models such as the Tiguan SUV, even as rising costs from the scandal hit profits. Daimler, while reporting resilient margins, said one-time charges to upgrade about 3 million diesel cars in Europe to resolve concerns about pollution from the fuel dragged on its result.
Reuters and Bloomberg contributed to this report