BMW anticipates a slight sales growth in 2025 but warns that earnings will remain flat due to ongoing economic challenges in China and rising tariff costs. The German automaker, which derives a significant portion of its profits from China, is facing increasing competition from local brands offering steep discounts, coupled with a slowdown in luxury spending.
The company is projecting a profit before taxes in line with 2024 but expects its automotive unit’s margin to remain between 5% and 7%. It is important to note that the company typically aims for a margin above 8%.
In addition, U.S. trade policies are likely to reduce margins by about one percentage point as tariffs on steel, aluminum, and vehicle imports take effect, which could impact earnings by hundreds of millions of euros. BMW executives indicated that the company will adjust production locations and explore greater U.S. component manufacturing to mitigate the impact.
BMW is also navigating weakened electric vehicle demand and trade tensions between the U.S. and China, which could further pressure its bottom line. In 2024, the company’s automotive EBIT margin declined to 6.3% from 9.8% the previous year, with fourth-quarter margins falling to 5.5%. Overall, group EBIT dropped to €11.51 billion from €18.48 billion, while revenue slipped 8.4% to €142.38 billion.
Despite these challenges, BMW is investing heavily in its future product lineup. The automaker spent over €18 billion in 2024 on research and development, focusing on its Neue Klasse digital production platform. The company plans to debut the first model in this lineup later this year, aiming to launch more than 40 new or updated vehicles by 2027. They also intend to introduce a hydrogen-powered fuel-cell electric vehicle in 2028.
While BMW expects solid market conditions in the U.S., growing demand for electrified vehicles drives growth in Europe. However, the company acknowledges that China will remain a difficult market. To maintain competitiveness, BMW is fully rolling out key models like the new BMW 5 Series, BMW X3, refreshed Mini lineup, and the updated BMW 2 Series Gran Coupe.
The automaker’s dividend has been cut from €6 to €4.30 per share, slightly below analyst expectations. Additionally, BMW is seeking shareholder approval to repurchase up to 10% of its share capital over the next five years. While the company is bracing for continued financial pressure, it remains focused on innovation and adapting to shifting global market conditions.
