BMW Forecasts Earnings Decline on Tariffs, China Costs

Geopolitical trade tensions, specifically President Trump's tariffs, are expected to significantly impact profitability, projected to reduce the automotive EBIT margin by approximately 1.25 percentage points. Concurrently, higher raw-material costs and strategic investments to stabilize its crucial China business are weighing on the outlook.

The Chinese market presents a dual challenge: intense competition from domestic brands offering deep discounts and a struggling economy dampening luxury consumer spending. Furthermore, currency fluctuations and a downturn in the used-car market are expected to negatively affect BMW's main automotive segment.

Despite these headwinds, the company has implemented substantial cost-cutting measures, achieving a EUR 2.5 billion reduction in expenses across R&D, sales, administration, manufacturing, and materials, which partially mitigates the pressures. BMW is also pushing forward with its "Neue Klasse" platform, with strong demand for the iX3 and the i3's imminent unveiling, signaling a long-term innovation strategy.

While global auto markets are expected to be stable, with China sales flat, growth potential is noted for Europe and the U.S. The company forecasts its automotive EBIT margin to land between 4% and 6% for 2026, down from 5.3% in 2025, and expects a moderate decline in overall group earnings before tax. Despite the cautious outlook, BMW raised its dividend for 2024, exceeding analyst expectations.