BMW has revised its profit margin expectations for its automotive business in 2025, forecasting margins below analysts’ expectations due to the recent U.S. tariffs and the ongoing trade war.
BMW has a clear one for the 2024 financial year Profit break-in have to accept. After taxes, the group generated 7.7 billion euros –, a decrease of 37 percent compared to the previous year. This continues the negative development, as BMW had already seen a significant decline in 2023.
The premium carmaker now anticipates its earnings margin for cars to be 5-7%, a decline from the LSEG consensus estimate of 7.3%, with tariffs imposed by March 12 contributing to a one-percentage-point reduction. “It is a realistic guidance in light of the current environment but still may disappoint investors looking for an 8% margin on the upper end,” analysts from J.P.Morgan said in a research note.
The United States has recently increased tariffs on steel and aluminum imports and imposed a 25% duty on some vehicles from Mexico, including those manufactured by BMW.
The company is at the center of an escalating trade war between the U.S. and the EU, with former President Donald Trump threatening to impose additional tariffs on European car imports starting April 2. Europe has vowed retaliation while calling for dialogue. Approximately 56% of vehicles produced by BMW in Germany are exported outside the EU, and its South Carolina plant in the U.S. exports cars worth over $10 billion, making BMW the largest U.S. automotive exporter by value, according to CEO Oliver Zipse.
“We benefit from an integrated global economy. That is why we continue to advocate for open markets and free trade,” Zipse said.
BMW’s net profit for 2024 fell by more than a third to 7.68 billion euros ($8.32 billion), in line with market expectations, after weak sales in China and Germany, along with delivery delays caused by brake issues, dented performance. Fourth-quarter profits dropped by 41%, consistent with earlier warnings from the company that higher fixed costs from unwinding inventory would impact earnings in the final months of 2024.
Shares of the company dropped 4% in early trading, marking the biggest decline on Germany’s DAX index.
The group proposed a payout ratio increase to 36.7%, one of the highest in its history, with a dividend of 4.32 euros per preferred share for 2024. However, this was still lower than the 6.02 euros paid out for the previous year.
BMW also lowered its 2024 margin outlook to 6-7% from an initial forecast of 8-10% made in September, due to slumping sales in China and issues with a brake supplied by Continental, which affected 1.5 million cars.
