BMW Spends Big to Catch Audi


BMW launched its first-ever electric car, the i3, this past week. Costs associated with the launch weighed on BMW's earnings in the second quarter. Photo credit: BMW.

BMW said its second-quarter profits dropped 8.8% to about $2.3 billion before taxes, despite an increase in global sales. The problem: BMW's costs are up, as it rushes to develop more new models to compete with Volkswagen's surging Audi brand. BMW still leads Audi in total global sales, but VW's luxury brand is closing the gap -- and Audi already leads BMW in an even more important measure: profitability.

Some of the quarter's cost increase was driven by the ramp-up to this past week's launch of the BMW i3, the company's first-ever all-electric car. In this video, Fool contributor John Rosevear digs into the numbers to give you a closer look at what's happening at BMW, the company's latest new products including the i3 -- and how it will try to fend off Audi's latest surge.

BMW still leads Audi on a global basis, but it has already fallen behind VW's luxury juggernaut in China. A recent Motley Fool report, "2 Automakers to Buy for a Surging Chinese Market," says that VW is one of the two global auto giants poised to reap huge gains as China's auto boom continues. You can read this report right now for free -- just click here for instant access.

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