BMW Faces Billion-Euro Blow from Trade Tariffs

BMW anticipates a 1 billion euro loss due to trade tariffs, impacting earnings margins for its vehicles. Trade tensions between the U.S. and EU threaten increased levies. Despite external challenges, BMW's net profit is down by over a third, attributing to weak sales and supply chain issues.

BMW is bracing for a financial hit amounting to 1 billion euros due to trade tariffs, CEO Oliver Zipse announced. The tariffs arise from EU duties on Chinese electric vehicles and new U.S. tariffs, which disrupt global trade dynamics. The company forecasts a lower earnings margin for its automotive segment, ranging from 5-7% by 2025, compared to LSEG's 7.3% estimate.

Zipse noted that the 1 billion euro provision is conservative and does not account for potential additional tariffs from the EU and U.S. Despite these challenges, there is optimism that existing tariffs, including those on steel, aluminum, and vehicle imports to the U.S. from Mexico, may not persist throughout the year. CFO Walter Mertl remarked that BMW's outlook would adjust if the trade situation evolves. This uncertainty has led to a 2.3% dip in BMW shares, reflecting investor concern over the reduced profit margins.

The escalating trade war between the U.S. and EU places BMW in a precarious position. U.S. President Donald Trump has threatened increased tariffs on European car imports, prompting potential EU retaliation and a call for dialogue. Notably, BMW exports 56% of German-made vehicles outside the EU, with its U.S. plant in South Carolina responsible for over $10 billion in car exports annually. CEO Zipse highlighted the impact on their profits, which declined over a third in 2024, in alignment with market expectations. Factors contributing to this slump include weak sales in major markets like China and Germany and supply chain disruptions.

(With inputs from agencies.)