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BMW · China Market · Earnings Guidance · Trade Tariffs
BMW, a luxury automaker, cut its 2025 pretax earnings forecast from flat to a slight decline, causing its shares to fall 7% due to delays in US and German customs refunds and persistent weakness in the Chinese market.
The German company now expects pretax earnings to decline slightly this year, a revision from its previous guidance for a flat outcome compared to 2024. BMW also halved its free cash flow expectations from its automotive business to above €2.5 billion and narrowed its profit margin forecast for that business to 5-6% from 5-7%, citing delays in US and German customs refunds.
RBC analysts stated this tariff news is disappointing, especially given BMW's perceived strong position. While BMW still assumes the European Union will retroactively implement a tariff reduction to zero, it expects a high three-digit million figure in customs reimbursements from the US and Germany only next year.
UBS and JP Morgan analysts emphasized that the timing of tariff refunds was not a significant issue; the focus is on BMW's ability to stabilize volume momentum and pricing power in China in FY26, which is crucial for the group's longer-term competitiveness. BMW reported strong sales in Europe and the US from January to September but noted China sales were below expectations.
German rival Mercedes Benz also experienced a 3.5% share drop after reporting declining sales due to similar tariff and China-related issues. BMW will publish its full quarterly results on November 5.
