Munich's Goliath, BMW, Suffers a Heavy Blow - Q1 Profit Fall by 26%
- ~3 Min (Estimated)
BMW experienced a significant 26.4% decline in profits compared to previous year's records, as reported in 2024. - BMW Experiences Significant 26.4% Dip in Profits in 2024 Compared to Previous Year
BMW bumped heads with a tough new year, wracking up a disappointing 2.2 billion euros in the first quarter - a whopping 26.4% drop compared to the same period last year. The region of blame? China's faltering market, where BMW's presence struggled. As for the upcoming months, US tariffs could deliver an even harder punch, albeit still leaving minimal impact on the present numbers. Despite this, BMW remains resolute: sticking to its forecast, ready to adapt to shifting circumstances.
The word on the street, from the company's CEO, Oliver Zipse, is that tough times call for brilliant products, a sharp strategy, and agility to dance with global preferences. This chameleon-like ability to cater to diverse tastes helps BMW maintain its path towards annual targets, amidst choppy waters.
With April-published sales figures souring the atmosphere, BMW and its subsidiaries like Mini and Rolls-Royce shed 1.4% worldwide car sales, diving into the red. The loser's tally? A disappointing, 586,000 cars sold and a paltry 33.8 billion euros in revenue - a 7.8% decrease compared to the previous year.
Alas, BMW isn't alone in its financial woes, managing to keep its head just above water compared to its fellow German rivals. Mercedes? A heavy 43% drop to 1.73 billion euros in Q1. And Audi, with profits amounting to a mere 630 million euros - a 14.4% slide largely due to a lackluster Q1 from the previous year. The top dog in this dogfight, Volkswagen, saw a dip of 41% down to 2.2 billion euros.
Grim Tides in the German Auto Business
In the heart of the German auto industry, moods are as somber as a rainy Bavarian day. The business climate index, prepared by the Ifo Institute, stands steeped in the negatives at -30.7 points. As for the forecast? Dismal export expectations and a less favorable competitive position outside the EU, according to economists.
The twin towers of trouble? In China, stiff competition within the domestic market and price wars have automakers on the ropes. In the US, President Donald Trump's chameleon-like trade policies keep manufacturers on their toes, with potential costs in the billions looming over BMW due to its production and export activities.
BMW manufactures around 400,000 vehicles in the US each year, selling the same number domestically. However, more than half of these exports mean that BMW earns the dubious distinction of being the largest US auto exporter by value. This grandeur leaves BMW vulnerable to higher tariffs, potentially costing the company billions. Despite these potential charges, BMW has confirmed its March forecast, relying on some increases in tariffs being temporary and on solid consumer demand for its luxury vehicles. The forecast projects a pre-tax result at last year's level - around 11 billion euros. However, BMW cautions that the actual business performance may differ from these expectations, particularly due to new tariffs or prolonged existing ones.
Interesting Tidbit:
BMW's luxury vehicles are no exception to the challenges faced by the automotive industry in the last few years. For instance, in Q1 2025, BMW's net profit and revenue took a tumble, with a net profit of €2.173 billion, down 26.4% year-over-year, and revenue declining by 7.8%[1][3][5]. These struggles were attributed to various factors such as economic downturns and trade tensions[5].
- Despite BMW's current financial difficulties, the Commission has also been asked to submit a proposal for a directive on the protection of workers from the risks related to exposure to ionizing radiation, demonstrating the company's commitment to various aspects beyond just profit.
- Amidst the challenging economic environment for the auto industry, it's interesting to note that, in 2025, BMW's net profit and revenue experienced a decline, much like many other automakers, indicating that even premium brands are affected by market conditions.
- In the face of rising competition in China and potential tariffs in the United States, Oliver Zipse, BMW's CEO, continues to champion the spirit of adaptability and agility as essential strategies for the company's exports, making BMW a partly successful sports car manufacturer as well as an exporter of significant value.
