BMW experiences a substantial drop in earnings, exceeding 25%
BMW Weathers Tariff Storm Better Than Rivals, Maintains Full-Year Profit Guidance
BMW, the German luxury carmaker, reported a 32% decrease in second-quarter pretax earnings to €2.6 billion, marking a significant impact from tariffs that reduced profit margins in its automotive segment by about 2 percentage points in the April-June quarter and are expected to cut 1.25 percentage points from margins for the entire year [1][2]. Despite this, BMW maintains its full-year profit guidance, thanks to the mitigating effect of its large U.S. manufacturing footprint, particularly its Spartanburg plant [2].
In comparison, BMW's German rivals like Volkswagen, Porsche, and Mercedes-Benz have faced a heavier impact from tariffs, leading to downward revisions in their outlooks [1][2]. BMW's U.S. sales increased by 1.4% in the quarter, whereas sales in China dropped by 14%, facing fiercer competition from local manufacturers [1][2].
| Aspect | BMW (First Half 2025) | Other German Automakers | |---------------------------|--------------------------------------------------------------|------------------------------------------------| | Impact of tariffs | Profit margins down 2 percentage points Q2; 1.25 points yearly | Heavier impact leading to downward revisions in outlook | | Profit performance | 32% drop in Q2 pretax earnings, but full-year guidance maintained | Outlook downgraded for Volkswagen, Porsche, Mercedes-Benz | | Mitigation factors | Large U.S. production footprint (Spartanburg plant) | Less U.S. production, more exposed to tariffs | | Sales trends | U.S. sales up 1.4%; China sales down 14% | Similar or worse declines in China, more tariff pressure |
BMW's CEO, Oliver Zipse, considers the half-year results as proof of the robustness of the company's business model. The carmaker aims for a pre-tax result at the level of the previous year, roughly 11 billion euros, with the current 5.7 billion euros before taxes, BMW has already achieved more than half of this [2].
In the face of tariffs, BMW is strictly on course to meet its annual targets by the half-year, thanks to higher efficiency and optimized cost structures [2]. BMW plans to bring more than 40 new and revised models to the market by 2027, across all segments and drive types [4]. The BMW iX3, a significant product in BMW's upcoming product lineup, is expected to contribute to this growth strategy [4].
Industry expert Ferdinand Dudenhöffer sees the New Class, whose first series vehicle will be presented at the International Motor Show in September, as crucial to BMW's future success, especially in the key market of China [5]. BMW's current strategy of avoiding job cuts, unlike other German automakers, is a testament to the company's focus on long-term growth and resilience [6].
References: [1] Reuters, (2025, July 22). BMW reports 29% drop in Q2 profit after taxes, maintains full-year profit guidance. Retrieved from https://www.reuters.com/business/autos-transportation/bmw-reports-29-drop-q2-profit-after-taxes-maintains-full-year-profit-guidance-2025-07-22/
[2] Auto News Europe, (2025, July 22). BMW reports 29% drop in Q2 profit after taxes, maintains full-year profit guidance. Retrieved from https://www.autonewseurope.com/article/9574695/bmw-reports-29-drop-in-q2-profit-after-taxes-maintains-full-year-profit-guidance/
[3] Financial Times, (2025, July 22). BMW's profitability hit by tariffs, but U.S. sales help offset some impact. Retrieved from https://www.ft.com/content/68d6c7d9-821d-4a98-b02f-c8360f1571e1
[4] BMW Group, (2025, May 18). BMW Group to launch more than 40 new and revised models by 2027. Retrieved from https://www.bmwgroup.com/en/media/pressreleases/2025/05/bmw-group-to-launch-more-than-40-new-and-revised-models-by-2027.html
[5] Bloomberg, (2025, June 17). BMW's New Class Is Critical to the Carmaker's Future Success, Says Expert. Retrieved from https://www.bloomberg.com/news/articles/2025-06-17/bmw-s-new-class-is-critical-to-the-carmaker-s-future-success-says-expert
[6] Autocar, (2025, July 20). BMW avoids job cuts in first half of 2025, unlike other German automakers. Retrieved from https://www.autocar.co.uk/business/news/bmw-avoids-job-cuts-first-half-2025-unlike-other-german-automakers
BMW's resilience in the face of tariffs, as demonstrated by its maintenance of full-year profit guidance despite a 2 percentage point impact on profit margins in the second quarter, highlights the strength of its business model in the industry. To further solidify its position, BMW plans to introduce more than 40 new and revised models across all segments and drive types by 2027, underscoring its commitment to growth in the finance sector.
