Nov. 4 (Bloomberg) -- Bayerische Motoren Werke AG, the world's largest maker of luxury cars, lowered its outlook for the second time this year after third-quarter profit plunged 63 percent as the global financial crisis sapped demand.

Vehicle sales will fall below last year's figure, the Munich-based company said today in a statement, abandoning a target of record deliveries as well as a forecast for a 4 percent operating profit margin in 2008.

The U.S. car market contracted by 32 percent in October, led by a 45 percent slide in sales at General Motors Corp., according to industry figures released yesterday. BMW's vehicle sales in the U.S., its biggest market, fell 5 percent last month. Consumer confidence in the country declined to the lowest level on record in October. The European Union said yesterday that the region's economy probably entered a recession in the third quarter.

``The financial crisis is by no means behind us yet, particularly its impact on the real economy in 2009,'' Chief Executive Officer Norbert Reithofer said in the statement.

BMW fell as much as 1.57 euros, or 7.6 percent, to 19.01 euros and was down 5.3 percent as of 9:24 a.m. in Frankfurt trading. The stock has dropped 54 percent this year, valuing BMW at 12.5 billion euros ($15.8 billion).

Earlier Predictions

The maker of BMW, Mini and Rolls-Royce cars predicted in August that it would break a vehicle-sales record and that the operating profit as a proportion of sales this year would narrow to more than 4 percent from 7.5 percent. It scrapped a previous target for 2008 pretax profit of 3.78 billion euros.

Third-quarter net income fell to 296 million euros from 800 million euros a year earlier, BMW said today. Profit missed the median estimate of 465 million euros, based on a Bloomberg News survey of four analysts. Revenue fell 8.6 percent to 12.6 billion euros. Earning before interest and taxes dropped 60 percent to 387 million euros.

BMW also increased provisions for bad debt and declining values of cars returned on lease to 1.04 billion euros from 695 million euros three months ago.

The carmaker and second-ranked competitor Daimler AG, the maker of Mercedes-Benz luxury cars, have scaled back production because of declining markets. BMW said today that it will cut production by a total of 65,000 vehicles, more than double original plans to curtail output by 25,000 cars and SUVs.

Daimler's Outlook

Stuttgart, Germany-based Daimler cut its 2008 profit forecast for the second consecutive quarter on Oct. 23 and suspended a share buyback program to conserve cash. Daimler has scaled back production by more than 45,000 vehicles.

Honda Motor Co., Japan's second-largest automaker, cut its 2008 U.S. sales forecast by 4.1 percent because of the faltering economy, predicting the first decline in the country in 15 years.

Gloomy markets have added pressure on automakers as they ramp up investment to meet tougher environmental standards. The European Automobile Manufacturers' Association called on the European Union in October to ease financial pressure by providing 40 billion euros in low-interest loans and permitting incentives for consumers to scrap older cars.

To contact the reporter on this story: Chris Reiter in Berlin at creiter2@bloomberg.net

Last Updated: November 4, 2008 03:25 EST