The slack demand for luxury EVs is hitting automakers already dealing with muted growth in Europe and duties in the US
[MUNICH] BMW lowered its financial guidance for the year on persistently weak sales in China and tariff-related costs, underscoring the difficulties Germany’s export-reliant auto industry is facing.
The luxury-car maker now expects pre-tax group earnings to decline slightly in 2025 compared to last year, down from an earlier expectation of an on-par result. BMW also slashed its projection for automotive free cash flow.
Western manufacturers are losing ground in China to homegrown rivals such as BYD and Xiaomi, which are offering feature-packed electric vehicles (EVs) at low prices. Fierce competition in the world’s biggest auto market is squeezing profit margins, hitting also Volkswagen’s Audi and Porsche. Earlier on Tuesday (Oct 7), Mercedes and BMW released third-quarter results that showed declining unit sales in China.
The slack demand for luxury EVs is hitting automakers already dealing with muted growth in Europe and duties in the US. Several of them have corrected course by cutting costs or shifting funds back into combustion-engine and hybrid models.
BMW now expects free cash flow of above 2.5 billion euros (S$3.8 billion), down from above five billion euros previously. The changes to guidance are related in part to payments to support dealers in China, the carmaker said in a statement late Tuesday.
The Munich-based company said that it’s also had to change assumptions related to tariffs, adding that it now expects reimbursements of customs duties from US and German authorities totalling a “high three-digit million figure” to be paid out next year instead of in 2025.
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The US last month lowered tariffs on auto imports from the European Union to 15 per cent retroactive to Aug 1, cementing the terms of the framework trade agreement the two sides struck almost two months ago.
BMW is betting that its next-generation EVs can help bolster sales. The company last month unveiled the iX3 sport utility vehicle, the first of its Neue Klasse line the manufacturer spent well over 10 billion euros on. BLOOMBERG
