BMW to face significant losses due to trade wars and tariffs
- BMW's net profit fell by 37% in 2024, reaching 7.7 billion euros amidst operational issues and weak demand in China.
- The company anticipates that US tariffs on steel and aluminum will heavily impact profit margins, with overall costs estimated around one billion euros.
- Looking forward to 2025, BMW expects earnings before taxes to remain at low levels, stressing the importance of adapting to rapidly changing trade policies.
In early March 2025, BMW, the German automaker, announced a significant drop in profits for the year 2024, reporting a net profit decline of 37 percent to 7.7 billion euros, while revenues also suffered a fall of over eight percent. This decrease was attributed to a combination of weakened demand in key markets, notably China, and operational issues affecting over 1.5 million vehicles due to poor braking systems. Additionally, the firm is navigating a challenging trade environment, marked by escalating tariffs between the United States, Europe, and China that threaten profit margins. BMW's finance chief, Walter Mertl, emphasized that recent tariffs on steel and aluminum implemented by the US would specifically impact their profit outcomes. The wider trade tensions have become increasingly troublesome as US policymakers impose tariffs in an attempt to protect domestic manufacturing, causing international companies like BMW to face rising costs. Furthermore, BMW's CEO, Oliver Zipse, estimated a total cost of one billion euros linked to these tariffs, a figure representing both US duties and the EU's car import levies directed at China. Looking ahead, the company has projected earnings before taxes for 2025 to remain at similar subdued levels as in 2024, while maintaining that the ever-evolving nature of trade policies would significantly influence these predictions. BMW also called on the EU to reconsider its tariffs on American cars as a measure to ease trade disputes. In parallel, the automaker lodged a legal challenge against the EU's tariffs on Chinese electric vehicles, indicating the complexity and potential backlash stemming from shifting trade regulations. Joachim Post, handling supply chains for BMW, mentioned that despite these challenges, their global network allows them to adopt flexible approaches to mitigate costs and avoid customs duties where feasible, presenting a strategy aimed at sustaining their operational viability amidst rising trade barriers.