BMW Faces a Rocky Start, China Fed up with Poor Sales
China's commercial activities hamper BMW's annual closing, impacting its year-end performance.
Let's face it, BMW isn't escape-proof from the industry's downward spiral. Even the German powerhouse reports a dismal first quarter. A sluggish China market, yet again, smothers BMW's profitability. Despite the looming uncertainties about US tariffs and uncertain future, the forecast remains unshaken.
In Q1 of 2025, BMW earns a mere 2.2 billion euros, a quarter less than the previous year. The culprit? A soured China market. As for the rest of the year, US tariffs might take a heavier toll, affecting the balance sheets significantly, though they haven't shown much impact so far. However, BMW clings to its forecast, albeit with a caveat—new tariffs or sustained ones could lead to deviations.
In the words of the CEO, Oliver Zipse, "In times as challenging as these, it's all about the right products, strategy, and adaptability." Stating that BMW caters to varying customer needs worldwide, he ensures robust results and continued progress towards the annual targets.
The uninspiring sales figures published in April tell a similar story: A 1.4% drop in worldwide sales for BMW Group (including Mini and Rolls-Royce) pushes them into the red. This dip is attributed to a sluggish China market, resulting in a €33.8 billion turnover—a 7.8% decline compared to the previous year.
BMW's not alone in the profit slump, incidentally. Mercedes reports a hefty drop of 43% to €1.73 billions in Q1, while Audi manages only €630 million, despite a 'mere' 14.4% drop, all thanks to a weaker comparative quarter in 2024. Volkswagen, a German giant, posts €2.2 billion and a 41% drop.
A Sour industry Mood
The German automotive mood is as grim as ever. The business climate index, compiled by the Ifo Institute, languishes at a negative -30.7. Researchers attribute the recent dip to deteriorating export expectations and a more pessimistic assessment of companies' competitive positions outside the EU.
Speaking of woes, the automotive industry has two major concerns at the moment: China is dealing with fierce domestic competition and intense price competition, while the US main focus is on President Donald Trump's erratic trade policies. Even Ford has spoken of billions in losses due to Trump's trade policy.
BMW manufactures roughly 400,000 vehicles annually in the US, which is nearly the same as it sells there. However, more than half of these are exported, making the import of other cars and parts into the US a necessity. Higher tariffs translate to significant financial pain for BMW, with potential losses in the billions.
A tough start, indeed, for BMW in 2025. But the company maintains faith in its guidance, anticipating earnings before tax to remain at 2024 levels—around €11 billion. Yet, the warnings are clear: "Actual business performance may differ from these expectations."
- The employment policy within BMW, Audi, Mercedes, and Volkswagen could face substantial adjustments due to the poor sales and trade uncertainties, especially with regards to US tariffs.
- Despite the current poor prognosis for the automotive industry, particularly in China, the community policy of these companies emphasizes adaptability and robustness, as demonstrated by BMW's continued commitment to annual targets.
- Under the general-news section, the sports sector might benefit from the reduction in Audi and Volkswagen's investments in the industry, as fewer cars produced could lead to reduced sponsorship and advertising spending.
- Tariffs imposed on imported cars and parts could significantly impact the audiology of BMW's financial outlook, potentially leading to hefty losses and deviations from their forecasted earnings.
