BMW to miss its targets for 2008

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German carmaker BMW has warned that deteriorating business conditions means it will miss its targets for 2008.

The warning came as it reported pre-tax profits of 602m euros ($937m; �474m) in the three months to the end of June - 43.5% below the same period in 2007.

The result was well below expectations and BMW shares ended the day down by 5.4% in Frankfurt.

BMW's warning follows Daimler's decision last week to cut its earnings guidance for the year.

Shares in other European carmakers were hit by the news, with Volkswagen falling 4.1% and Renault down 3.6%.

'Another difficult year'

"Business conditions for the automobile industry deteriorated sharply again in the second quarter due to further ongoing steep rises in oil and raw material prices, the weakness of the U.S. dollar, the impact of the international financial crisis and a weaker US economy," BMW said.

And the carmaker said it was not particularly optimistic about next year either.

"We assume that 2009 will be another difficult year full of challenges," said chief executive Norbert Reithofer.

BMW's profits have also been depressed by one-off charges.

It has made a 695m euro provision to cover financial risk, which includes current falls in the price of used cars, which reduces the amount that BMW can get for cars when they reach the end of lease deals.

It also spent 107m euros on reducing staff numbers.

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