STORY: BMW expects a slight drop in pre-tax profit this year.

It cites higher research and development, personnel and manufacturing costs.

It also sees a fall in used car prices as contributing to the decline.

The German auto giant on Wednesday (May 8) reported a fall in its first-quarter profit margin in the automotive segment.

It blamed persistently higher costs weighing on its bottom line, while demand for luxury cars in China was muted.

The automaker's pre-tax margin in the car segment fell to 8.8% from 12.1% a year earlier - below analyst forecasts.

First-quarter revenue dropped slightly despite a slight rise in car sales.

Q1 group pre-tax profit fell just under 19% to $4.40 billion, but beat analyst forecasts.

Sales of fully electric cars rose 28% to 83,000 vehicles during the period.

BMW is investing heavily in EVs and model revamps across its line-up.

It expects record spending this year, up from more than $8 billion last year.

BMW rivals Mercedes Benz and Porsche have also spent big.

German carmakers want to tackle growing competition in the EV market from China and Tesla.

BMW shares were down over 3% after the update.