BERLIN, March 12 (Reuters) - BMW's operating profit margin for the core automotive segment slumped further than forecast in the fourth quarter, the company said on Thursday. The premium carmaker's
BMW braces for another year of tariff and China struggles
BMW Faces Ongoing Challenges in Global Markets
By Rachel More and Christina Amann
BERLIN, March 12 (Reuters) - BMW sees little relief ahead with ongoing tariff costs and intense competition in China, warning on Thursday of a moderate decline in 2026 pre-tax earnings and a stagnation in deliveries of its cars.
Competitive Landscape and Market Pressures
BMW's rivals Volkswagen and Mercedes also reported a weak 2025 dominated by trade barriers, falling China sales and electrification missteps as market demand for EVs diverges in key markets.
Geopolitical Risks and Supply Chain Concerns
The outbreak of war in the Middle East is rattling nerves further, fuelling supply chain concerns, driving up fuel prices and threatening demand in that region, a key market for premium marques like BMW and its subsidiary Rolls-Royce.
Company Strategy Amid Uncertainty
Leadership Perspective
RISKS AHEAD IN 'UNSTABLE' WORLD
CEO Oliver Zipse said BMW was holding ground with a strategy to overhaul its model lineup and cut costs, but warned of uncertainty ahead.
"Our world remains unstable, and numerous risks will persist in the current financial year," he said after the company reported a 6.7% slump in 2025 pre-tax profit.
Shares in the company, Germany's most valuable carmaker, were trading 1.3% lower at 0916 GMT.
Tariff Impacts and Trade Relations
The impact of tariffs is expected to ease somewhat this year, with CFO Walter Mertl hoping for new trade deals between Washington and its trade partners in the European Union, Mexico and Canada in the second half.
However, the company said it expects higher tariffs will deal a 1.25 percentage-point blow to the group's core automotive margin in 2026, which it expects to be in a range of 4 to 6%.
This follows 5.3% in 2025 and 6.3% in 2024.
Production and Regional Effects
BMW's production presence in the United States - its largest plant is in Spartanburg, South Carolina - has cushioned the blow of U.S. tariffs somewhat, but it also faces EU tariffs on its Chinese-made fully electric Mini.
Financial Outlook and Future Prospects
Earnings and Sales Forecasts
Group earnings before tax fell to 10.2 billion euros ($11.78 billion) in 2025 and are forecast to fall further in 2026, by between 5% and 9.9%.
Deliveries are to stay on a par with 2025, a year that already saw a 12.5% sales decline in key market China.
In 2026, "China could reach last year's level," Mertl said.
Growth Opportunities and Product Strategy
The company however sees growth potential in the U.S. and Europe, while it ramps up its 'Neue Klasse' suite of revamped cars with 40 launches planned this year and next.
($1 = 0.8659 euros)
(Reporting by Rachel More, editing by Miranda Murray, Tomasz Janowski and Susan Fenton)
