In light of EU levies on its China-made electric vehicle and recently imposed US tariffs that are disrupting international trade, BMW's CEO stated that the automaker anticipates paying 1 billion euros ($1.09 billion) in trade penalties this year.
Due to the impact of tariffs that were already in place by March 12, the luxury automaker projects its earnings margin for automobiles to be 5-7 percent in 2025, which is one percentage point lower than the LSEG consensus forecast of 7.3 percent.
The group's results included a 1 billion euro provision, which Chief Executive Oliver Zipse described as "conservative" given the potential for more tariffs from the US and the EU.
However, executives did not anticipate that all of the current tariffs, which include 25 percent duties on steel and aluminum as well as on BMW's Mexican auto imports into the US, would last the entire year, Zipse added.
At 0803 GMT, BMW's stock was down 2.3 percent as investors expressed disappointment at the group's vehicles segment's lower-than-expected profitability.
With the US President Donald Trump proposing higher duties on European auto imports starting on April 2 and Europe promising retribution while simultaneously asking for discussion, the German automaker is squarely in the crosshairs of an intensifying trade war between the US and the EU.
BMW's South Carolina facility exports cars valued at over $10 billion, making it the largest US automotive exporter by value, and about 56 percent of the cars it builds in Germany are exported outside the European Union, according to CEO Zipse.
Following poor sales in China and Germany as well as delivery delays due to brake issues, BMW's net profit fell by more than a third in 2024 to 7.68 billion euros ($8.32 billion), in line with market estimates.
In keeping with the automaker's January forecasts that higher fixed expenses from unwinding inventories would hurt its earnings in the final three months of 2024, the fourth quarter profit fell 41 percent.
The group suggested a payout ratio rise of 36.7 percent, which would be among the greatest in its history. The dividend for 2024 would be 4.32 euros per preferred share, which is still less than the 6.02 euros distributed the year before.
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BMW lowered its 2024 profit forecast from 8–10 percent in September to 6-7 percent due to declining sales in China and issues with a Continental brake that affected 1.5 million vehicles.