BMW's profits experience a substantial decrease, amounting to over a quarter
BMW Weathers Tough First Half Despite Challenges
German car manufacturer BMW has faced a challenging first half of 2025, but the company has managed to maintain its resilience and avoid significant job cuts, unlike many of its competitors.
BMW's substantial manufacturing presence in the United States, particularly in Spartanburg, South Carolina, has played a crucial role in mitigating the impact of tariffs. The plant produces half of the cars BMW sells in the US, and an additional 200,000 cars are exported to other countries.
Despite the tariffs, BMW's profit margins were affected by about 2 percentage points in the April-June period, and an estimated 1.25 percentage points for the full year. However, the company was able to maintain its full-year margin guidance of 5-7% due to local production serving the US market, reducing exposure to tariffs compared to competitors.
The Chinese market, however, posed a more significant challenge for BMW. The company experienced a 14-15.5% decline in Chinese sales amid intensifying competition from local electric vehicle makers like BYD. This sales drop significantly contributed to an 8% revenue decline and a plummeting net profit.
BMW CEO Oliver Zipse views the company's half-year results as evidence of the robustness of BMW's business model. Despite the challenges, the company remains nearly stable, with around 1.2 million vehicles sold.
The Neue Klasse strategy is BMW’s longer-term plan for electrification and innovation, aimed at counteracting competitive pressures and market challenges. While details on Neue Klasse were not explicitly mentioned in the search results, it involves launching a new generation of electric vehicles designed to enhance efficiency, sustainability, and competitiveness against rivals, especially in China and globally.
The Neue Klasse product offensive includes a variety of electric vehicles, which are a focus of the competition in the Chinese market. BMW is hoping for the Neue Klasse, with the first series vehicle set to be presented at the IAA in September.
Other German car manufacturers, such as VW, Audi, and Mercedes-Benz, have experienced more significant profit declines than BMW. However, for precise and updated plans specifically tied to Neue Klasse in that timeframe, additional sources beyond the search results would be necessary.
Ferdinand Dudenhöffer, an industry expert, views the Neue Klasse as crucial to BMW's future success, especially in the important Chinese market. The Neue Klasse is expected to contribute significantly to BMW's product portfolio over the next few years, with more than 40 new and updated models expected by 2027.
If tariffs on car exports from the US to Europe are reduced to zero, as is currently being discussed, BMW would benefit to some extent, but this effect would not offset the burden of the 15 percent tariffs on exports to the US.
In summary, BMW sustained a significant profit decline in the first half of 2025 due to tariffs and slumping sales in China but maintained guidance thanks to US production and resilience. The Neue Klasse strategy underpins BMW’s longer-term response to these challenges by focusing on advanced electric vehicles and innovation to regain market strength and competitiveness. Munich residents have come out of the first half of the year "stable, but not without scars."
- In the face of tough financial challenges, BMW's news about maintaining resilience and avoiding significant job cuts demonstrates the company's technological innovation and adaptability in the changing automotive market.
- Despite a decline in Chinese sales and an 8% revenue decrease, BMW's focus on the Neue Klasse strategy, particularly in the electric vehicle market, signals their intention to weather the current market conditions and remain competitive in the finance sector, particularly in China and globally.
