BMW on Wednesday reported a lower first-quarter profit margin in its automotive segment as persistently higher costs continued to weigh and demand for luxury cars in China remained muted.

The German premium automaker's earnings before taxes (EBT) margin in the car segment fell to 8.8% versus 12.1% in the same period last year and 9.2% expected by analysts in a company-compiled consensus.

The Munich-based group forecast EBT to decrease slightly this year due to higher manufacturing and personnel costs, as well as research and development expenses. A decrease in used car prices this year would also contribute to the decline.

BMW is investing heavily in electric vehicles and model revamps across its line-up and expects spending to hit a record high this year, up from 7.5 billion euros last year.

Peers Mercedes Benz and Porsche are following suit as the German carmakers are trying to tackle growing competition in the electric vehicle market from China and Tesla.

Group EBT fell 18.9% in the January-March period to 4.1 billion euros ($4.40 billion), but still above the 3.9 billion euros expected by analysts.

Sales of battery electric vehicles (BEV) rose 28% to 83,000 vehicles in the quarter.

 

($1 = 0.9313 euros)

(Reporting by Andrey Sychev and Christina Amann, Editing by Rachel More)