BMW sales, profits down

Bayerische Motoren Werke AG, the world's largest maker of luxury cars, fell the most in seven years in Frankfurt trading after abandoning its profit forecast on falling U.S. sales, the dollar's decline and rising costs for plastics, steel and oil.

BMW fell as much as 10.8 percent. Second-quarter net income dropped to 507 million euros ($790 million) from 753 million euros a year earlier, the Munich-based company said today, missing the median estimate of 703 million euros in a Bloomberg survey. Sales declined 0.9 percent to 14.6 billion euros.

Chief Executive Officer Norbert Reithofer plans to cut production by more than 20,000 vehicles, raise prices and ship cars produced for the U.S. to other markets after sales “deteriorated sharply over the past weeks.'' His prediction of “another difficult year'' in 2009 comes seven days after Daimler AG lowered its forecast. Car sales in the U.S., BMW's biggest market, have fallen 10 percent this year as soaring gasoline prices and slowing economic growth hurt consumer spending.

“What's surprising is the size of the cut,'' said Georg Stuerzer, an analyst at UniCredit Markets & Investment Banking in Munich, who recommends investors buy the stock. “Next year won't become easier due to currency risks and commodity prices.''