Local time May 7, BMW group released the first quarter financial results. Because the car sales slowdown in key markets and provision with an eu antitrust investigations related to 1.4 billion euros (RMB 10.6 billion) legal provisions, in the first quarter of this year, BMW group net profit fell 74.2% year-on-year, from the same period of last year's euro 2.282 billion (RMB 17.3 billion) fell to 588 million euros (RMB 4.5 billion).

　　♦ for potential fines set aside 1.4 billion euros

　　In the first quarter of this year, BMW group sold 605,000 cars including BMW, MINI and Rolls-Royce brands, up 0.1 percent year on year. Revenue was 22.462 billion euros, roughly flat from a year earlier. But earnings before interest and tax, or EBIT, fell 78% to 589 million euros from 2.7 billion euros a year earlier.

　　One of the main reasons for the profit decline was that BMW set aside €1.4bn to deal with possible eu fines. The eu investigation has been ongoing since 2017, when German magazine der spiegel exposed the cartels of Volkswagen, audi, porsche, BMW, Daimler and other car companies.

　　In April, the European commission announced through an investigation that Daimler, BMW and Volkswagen had illegally monopolized clean technology for diesel engine emissions. The penalties for the three companies, with Volkswagen and Daimler likely to cooperate with the investigation and provide evidence, will probably not be fined, while BMW could face hefty fines. BMW later said it would use all available legal means to fight the commission's allegations if necessary, but admitted it could face fines of more than €1bn as a result of an eu investigation into the German carmaker. BMW has set aside 1.4 billion euros for possible fines.

　　♦ auto business losses for the first time in ten years

　　In addition to the €1.4bn set aside, first-quarter results were also hurt by price competition in some markets, new technology development and spending on real estate, factories and equipment.

　　Notably, BMW's auto division posted its first operating loss in a decade in the first quarter, with a loss of 310 million euros, compared with a profit of 1.88 billion euros a year earlier. The closely watched EBIT margin fell to negative 1.6% from 9.7% a year earlier.

　　Excluding provisions set aside for fines, the auto division's profit fell 42 percent to 1.1 billion euros, or about $1.5 billion, with an operating margin of 5.6 percent. In contrast, the return on sales at mercedes-benz's passenger car division fell to 6.1% from 9% a year earlier. Volkswagen also said its passenger vehicle business would see sales returns at the low end of the range of 6.5 to 7.5 per cent this year.

　　BMW has had a weak start to the year due to pricing pressures, trade disputes and the introduction in Europe last September of a global emissions test for light vehicles (WLTP). However, BMW is optimistic for the full year, forecasting year-on-year growth in car sales in 2019, and has set an EBIT margin target of 8-10 per cent. The company expects profit margins in the auto business to be between 4.5% and 6.5% due to antitrust litigation. The outlook is expected to be brighter in the second half of the year with the launch of an improved 3-series sedan and the X7, a full-size SUV.

　　♦ cuts in traditional power transmission system

　　In the first quarter of this year, BMW spent more money upfront than it did in the same period last year to ensure it was in the driver's seat for future mobile travel, the company said in a statement. Research and development expenses totaled 1.396 billion euros in the first quarter, up 8.4% from a year earlier. Investment in real estate, plant and equipment also rose by more than a third, from 734 million euros to 999 million euros. Electrification is one of the future directions of BMW. By 2025, the BMW group will have at least 25 electric models.

　　BMW is also pursuing a cost-cutting programme, phasing out some models and cutting development time by a third. "From 2021, up to 50 percent of current powertrain products will be phased out in a transition to a more flexible vehicle architecture." BMW said in a statement that the group was on track to achieve more than 12 billion euros (91 billion yuan) in cost cuts by the end of 2022.