Bayerische Motoren Werke AG (BMW), the world’s biggest maker of luxury vehicles, forecast weaker auto profitability in the fourth quarter after investments to roll out new models like the i3 electric car weighed on results.

Spending will exceed targets this year and continue at a high rate in 2014 as BMW broadens its lineup and builds new factories, the Munich-based company said today. The outlays led to third-quarter earnings before interest and taxes falling 3.7 percent to 1.93 billion euros ($2.6 billion).

Third-quarter Ebit at the manufacturer’s auto division fell 6 percent to 1.55 billion euros. That resulted in the profit margin narrowing to 9 percent from 9.6 percent a year ago. Fourth-quarter automotive profitability will be at the lower end of a target range of 8 percent to 10 percent, BMW said today.

BMW is under increasing pressure to keep ahead of German competitors. Daimler’s Mercedes-Benz Cars division, which also includes the Smart city-car brand, reported a 23 percent surge in third-quarter Ebit. Operating profit at Volkswagen jumped 20 percent as earnings from the Porsche sports-car brand partly offset investment to expand Audi.

Mercedes gained ground against BMW and Audi in September as the introduction of the CLA coupe helped demand almost double for the company’s compact models. Nine-month sales by Mercedes rose 10 percent to 1.06 million cars and SUVs, compared to a 9 percent gain at the BMW brand to 1.21 million deliveries and 7.6 percent growth at Audi to 1.18 million.

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BMW's Q3 2013 Earnings Fall 6% at Automotive Division- Even Weaker Q4 Profits Expected on Surging Costs

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