BERLIN: BMW on Thursday reported a lower-than-expected profit margin in its core automotive segment during the second quarter, as heightened competition and weaker demand in China weighed on the luxury carmaker’s sales.

The German automaker’s earnings before interest and tax (EBIT) margin in its car segment fell to 8.4% from 9.2% in the same period last year, falling short of the 8.7% expected by analysts, according to a company-compiled consensus.

BMW also pointed to a consistently high level of investment, with the carmaker’s record spending on model revamps and electric vehicles expected to peak this year.

The company confirmed its guidance for 2024, flagging a slight decrease in the group’s pre-tax earnings due to the higher costs related to research and development, manufacturing and personnel.

The BMW auto segment’s margin in the second quarter came in at the lower end of the company’s full-year target range of 8-10%.

BMW and its peers are under pressure in their key market China, where local carmakers are gaining share with lower-cost electric vehicles, forcing their European rivals to slash prices.

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The Munich-based carmaker saw a 4% slump in its China sales in the first six months of the year but performed better in the region than Volkswagen and Mercedes.

BMW expects the economic situation in China to stabilise in the third quarter, it said in a statement.