BMW's net profit dropped by one-third to 76.8 billion euros last year, worrying about being squeezed by tariffs from the US, China, and Europe this year.

German classic car brand BMW (Bayerische Motoren Werke AG (BMW for short) stated that the global trade tariff war may result in a €1 billion reduction in BMW's earnings. The escalating trade tensions between China, the EU, and the US have a significant financial impact on BMW's global market. Half of BMW's products, which are made in Germany, are exported to countries outside the EU, with the largest export destination being the US. BMW vehicles manufactured in the US using steel imported from Mexico are subject to a 25% tariff imposed by the US. Under the BMW Group, the brands Mini Cooper and Mini Aceman electric cars are produced in China. The EU imposes a 20% tariff on Chinese-made BMW electric cars, and BMW is currently in litigation with Chinese manufacturers against the EU, with the case still pending.

The EU and the US are about to impose further tariffs which will have a greater impact on this long-established car manufacturer. BMW's CFO Walter Mertl said that if the situation of multiple tariff sanctions continues to escalate, the company's prospects will also change.

US-EU-China trilateral tariff sanctions squeeze profits

Local Chinese electric car brands are growing rapidly, gradually squeezing BMW's electric car market. BMW's market share in China is already very small, and now profits are even tighter. Trump's tariff sanctions and trade wars have disrupted BMW's global supply chain. Stifel Research analyst Daniel Schwarz said that BMW's prospects in the Chinese market will be more challenging, with no improvement in sight for the future, and BMW's reliance on the US market will increase. BMW produces SUVs in the US and sedans in Europe. With Trump imposing a 25% tariff on steel imports from Mexico, the profits of US-made BMW SUVs are compressed, while European-made sedans exported to the US are affected by US tariffs, subjecting this German classic brand to multiple pressures. BMW has stated that it will not lay off employees in Germany, while its competitors Porsche, Mercedes-Benz, and Audi are all undergoing large-scale restructuring to reduce costs.

BMW's net profit in 2024 plummeted by more than one-third.

Due to weak sales in the Chinese and German markets and delivery delays caused by brake issues, BMW's net profit in 2024 plummeted by more than one-third to 7.68 billion euros. Profit in Q4 declined by 41%, with increased fixed costs due to reduced inventory affecting the earnings in the last three months of 2024.

The BMW Group has proposed to increase the dividend payout ratio to 36.7%, one of the highest in history. The preferred stock dividend per share in 2024 is 4.32 euros, still lower than the 6.02 euros in the previous year.

BMW is considering the impact of the EU imposing full-year tariffs on electric vehicles made in China, as well as the 25% tariffs imposed by the United States on steel, aluminum, and cars imported from Mexico, with a profit margin of about 5-7% this year. BMW's global market share in electric vehicles is only 2.5% in 2024, far below Tesla's 20.8% and BYD's 17.6%. Source: Sina Finance. According to BMW Blog, the BMW M Series will introduce new electric vehicles, a favorite among high-end consumers. However, BMW is facing pressure from tariffs imposed by the US, China, and the EU, making future sales performance uncertain.

This article BMW last year net profit fell by a third to 7.68 billion euros, worried about being squeezed by US, China and Europe tariff sanctions this year, first appeared in Chain News ABMedia.