FRANKFURT -- BMW said its pretax profit and vehicle deliveries would drop significantly this year as the coronavirus spreads. That combined with higher R&D spending this will lower the profit margin in its automotive segment.
The company also said it is preparing to suspend production at its plants in Europe and in Rosslyn, South Africa, until April 19, responding to lower demand and as a way to help reduce risk of spreading the contagion.
BMW said the current uncertainty regarding the global spread and effects of the coronavirus makes it difficult to provide an accurate forecast for 2020, but it expected lower delivery volumes in all major markets in 2020.
"Group profit before tax is expected to be significantly lower than in 2019," BMW said in a statement on Wednesday.
Based on the latest forecast, the earnings before interest and tax (EBIT) margin of the automotive segment is therefore expected to lie within a range of between 2 percent and 4 percent, it said.
BMW said it will invest 30 billion euros on R&D until 2025 so it can bring next-generation electric and hybrid vehicles to market.
Earlier this month, BMW said higher R&D spending and manufacturing costs had caused EBIT to drop 17 percent to 7.41 billion euros ($8.26 billion) in 2019.
As a result, the operating margin in its automotive division fell to 4.9 percent last year, from 7.2 percent in 2018.