BMW's Profit Declines by 26.4% Compared to 2024's Figures - BMW experiences a significant 26.4% dip in profits compared to previous year's earnings in 2024.
A Rough Patch for BMW: A 26.4% Drop in Profits
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Welcome to the not-so-bright start of 2025 for BMW. According to their latest figures, the group earned a disappointing 2.2 billion euros in the first quarter, marking a staggering 26.4% decrease from the previous year. Let's delve into the factors that contributed to this substantial setback.
BMW's Financial Downturn
The blows came from multiple directions. A sluggish performance in China turned out to be particularly damaging to BMW's balance sheet. The looming impact of US tariffs is also a concern, though their exact effect remains to be seen.
Undaunted, CEO Oliver Zipse stayed optimistic: "In trying times, it's essential to focus on our products, strategy, and adaptability. We cater to diverse customer needs worldwide, and we're determined to deliver robust results and maintain our progress towards our annual targets."
The sales figures disclosed in April painted a grim picture. A significant drop in China pushed the worldwide sales of the BMW group, which incorporates Mini and Rolls-Royce, down by 1.4% to 586,000 vehicles. This resulted in a turnover of 33.8 billion euros, a 7.8% decrease from the previous year.
How BMW Compares
BMW isn't the only player in the automotive industry grappling with profit decline. Its German competitors are facing similar challenges. For instance, Mercedes reported a steep 43% drop to 1.73 billion euros for the first quarter, while Audi managed only 630 million euros, a 14.4% decrease. Germany's number one and Audi's parent company, Volkswagen, reported a 41% drop to 2.2 billion euros.
The Mood in the German Automotive Industry
The overall sentiment in the German automotive industry is gloomy, as evidenced by the business climate index for the sector, which currently stands at -30.7 points, deep in the negative territory. Export expectations have taken a nosedive, and companies are assessing their competitive position outside the EU more negatively.
BMW's Struggle in the US
The industry faces two significant hurdles: increasing domestic competition and intense price competition in China, and the uncertainty surrounding President Donald Trump's trade policies in the US. Although BMW produces around 400,000 vehicles in the US each year, approximately the same number as it sells there, more than half of these vehicles are exported, making BMW the largest US auto exporter by value.
The potential costs of tariffs and retaliatory tariffs could be in the billions, threatening BMW's bottom line. Despite this, BMW remains hopeful, maintaining its March forecast, with an expected pre-tax result at last year's level, around 11 billion euros. However, the company warns that actual business performance may differ from these expectations due to potential new tariffs or the extended duration of existing tariffs.
- From the enrichment:
- BMW reported a 26.4% decrease in net profit to €2.173 billion in Q1 2025, compared to €2.951 billion in Q1 2024.
- The Automotive Segment’s EBIT margin in Q1 2025 was 6.9%, at the upper end of BMW’s full-year guidance range of 5-7%.
- Factors contributing to the profit decline include revenue decline, lower EBT, higher provisions consumption, increased capital expenditures, and challenging market conditions.
- Despite these challenges, BMW's focus on electrification and cost discipline helped maintain profitability within target ranges for its Automotive Segment.
- BMW's sales figures in Q1 2025 showed a decrease of 1.4% to 586,000 vehicles, while the North American market reported a 3.7% increase in sales, with EV sales up by 26.4%.
- The Commission, in response to the financial struggles faced by BMW and other automotive businesses in the transportation sector, 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 in industries like finance and manufacturing.
- Despite BMW being the largest US auto exporter by value, producing around 400,000 vehicles annually, the uncertainty surrounding President Donald Trump's trade policies in the US presents a formidable hurdle for the company, with potential costs of tariffs and retaliatory tariffs potentially reaching billions, threatening BMW's bottom line.
- As the industry grapples with factors such as domestic competition, price competition in China, and political uncertainty, businesses like BMW rely on their ability to adapt and innovate, focusing on electrification and cost discipline to maintain profitability within target ranges for their Automotive Segment.
