BERLIN (Reuters) - German luxury carmaker BMW (>> Bayerische Motoren Werke AG) said third-quarter operating profit at its key automotive division fell more than expected due to the cost of new technology and price discounts in core European markets.

Munich-based BMW said on Tuesday the division's earnings before interest and tax (EBIT) dropped 6 percent to 1.55 billion euros (1.3 billion pounds), missing analysts' average forecast of 1.59 billion euros in a Reuters poll.

That reduced its automotive EBIT margin by half a percentage point to 9 percent in the quarter, compared with 9.4 percent at Volkswagen's Audi (>> Volkswagen AG) and 7.3 percent at Daimler's Mercedes-Benz (>> Daimler AG).

BMW is revamping its product line-up, launching a combined 25 new vehicles this year and next. The cost of launching the all-electric i3 compact, due to hit showrooms this month, and other technologies are weighing on company books.

"Once BMW's i start-up costs are diminishing, focus will return to growth," Arndt Ellinghorst, head of automotive research at London-based ISI, said in a note to clients after results were published.

BMW stood by its forecast for a full-year automotive EBIT margin between 8 and 10 percent and group pretax profit on a similar level to last year's 7.82 billion, though it cautioned conditions in auto markets may remain "volatile and challenging" in coming months.

The carmaker is counting on new models including the overhauled 5-Series saloon, the next generation of the X5 SUV and the 4-Series coupe to keep up its sales momentum.

Global deliveries, also including Rolls-Royce and MINI brand cars, may post single-digit percentage growth to a new record, BMW said, reaffirming targets.

(Reporting by Andreas Cremer; Editing by Maria Sheahan and Mark Potter)

Stocks treated in this article : Bayerische Motoren Werke AG, Daimler AG, Volkswagen AG