BMW said its earnings fell 28% in the second quarter of 2012 due to higher costs for investments in new technology and personnel.
Despite the fall in profit against the same quarter last year, which enjoyed an exceptional gain, the German luxury car maker reported record sales.
It also held on to its outlook and maintained its high profit margins on car sales.
But BMW cited "intense market competition" and warned that any worsening of Europe's crisis or a slowdown in China could hurt it.
It is already facing headwinds from Europe's debt crisis, which has devastated economies in nations such as Spain and Greece and kept Europe sales flat from the year before.
Net profit fell to €1.28 billion from €1.77 billion a year ago. Sales rose 7% to €19.2 billion. The fall in net profit is partly due to €464m in one-time benefits from the same time last year, which also saw record profits that made it harder for BMW to equal the previous year figure.
BMW said "higher personnel costs, increased expenditure on development and new technologies, intense market competition and the higher baseline of the previous year's record second-quarter earnings all contributed to the lower earnings figures in 2012."
The company reported record sales of 475,000 vehicles and said its profit margins remained at a strong 11.6% on car sales, the same as in the first quarter though slightly down from a year ago. That is a key figure indicating the company is maintaining its ability to generate good profits from sales.
Earnings were supported by continuing sales increases in China, where they rose 31%, and by a 10% increase in the US. Strong global sales of the X3 sport utility, which jumped 38%, helped profits.
"The BMW Group continued to perform extremely well," CEO Norbert Reithofer said in a statement.
The company, which has also invested in electric cars and the use of high-tech carbon fibre parts, said it had increased technology and development costs and cited investments in its production network. It also has 5% more workers, at 102,000, than it did in the quarter last year.
