BMW Group Reports Decline in Revenue and Profit for First Half of 2023

On July 31, German automaker BMW Group announced that its revenue for the first half of this year reached €67.685 billion, down from €73.558 billion in the same period last year, representing an 8% year-on-year decline. The automotive segment's revenue also fell 6.9% to €58.654 billion, compared to €63.009 billion last year. The EBIT (Earnings Before Interest and Taxes) dropped to €5.803 billion, a significant decrease of 26.8% from €7.931 billion in the same period last year, with the automotive segment's EBIT plunging 32.8% to €3.626 billion from €5.394 billion. Net profit fell to €4.015 billion, down 29% from €5.656 billion last year. The pre-tax profit (EBT) was impacted by exchange rates and a decline in sales in the Chinese market, decreasing by 28.6% to €5.727 billion from €8.023 billion last year. The automotive segment's EBT fell by 34% to €3.517 billion from €5.33 billion last year, and the EBIT margin for the automotive segment dropped from 8.6% to 6.2%. Notably, BMW Group reported that its automotive deliveries totaled 1,207,594 units in the first half, slightly down 0.5% from 1,213,276 units a year earlier, with sales in the Chinese market dropping by 15.5%. As of December 31, 2024, the number of employees at BMW Group stands at 159,104. In the second quarter of this year, revenue was €33.927 billion, down 8.2% from €36.944 billion last year, with the automotive segment also declining by 8.2% to €29.443 billion (compared to €32.07 billion last year). EBIT for the second quarter fell to €2.661 billion from €3.877 billion, a 31.4% year-on-year decline, with the automotive segment's EBIT down 40.3% to €1.602 billion from €2.684 billion. Net profit dropped to €1.842 billion, down 31.9% from €2.705 billion last year, and EBT decreased by 32.3% to €2.614 billion from €3.861 billion last year, though it was slightly above analysts' expectations. The automotive segment's EBT fell by 38.6% to €1.613 billion from €2.627 billion last year. The EBIT margin for the automotive segment decreased from 8.4% to 5.4%, slightly below the 5.5% predicted by analysts in a company survey, but still within the target range for 2025. The automotive segment's deliveries reached 621,477 units, a slight increase of 0.4% from 618,743 units last year. Despite facing impacts from U.S. tariffs and a one-third drop in second-quarter profits, BMW Group maintains its financial outlook for the full year 2025. The company stated that its extensive manufacturing presence in the U.S. gives it an advantage over competitors. In contrast, Volkswagen Group and its luxury brand Porsche, as well as Mercedes-Benz Group, have all revised their financial expectations downward. The EU and U.S. reached an agreement where the U.S. will impose a new 15% tariff on cars imported from the EU, lower than the current 27.5% tariff, but still a significant barrier for European carmakers reliant on exports. BMW Group has its largest factory in the U.S. and is Germany's largest car exporter by value. Although BMW Group's initial forecast was made in March before the tariffs were imposed, the company still expects its pre-tax profit to remain flat year-on-year in 2025, with last year's pre-tax profit slightly below €11 billion and employee numbers stable compared to last year. Automotive deliveries are expected to increase slightly, with an EBIT margin projected between 5% and 7%, a return on capital employed (ROCE) between 9% and 13%, and a return on equity (ROE) between 13% and 16%. BMW Group also anticipates a tariff impact on the automotive segment's profit margin of approximately 1.25 percentage points for the year, with around 1.5 percentage points for the first half of this year. CFO Walter Mertl stated, 'Our operational setup in the U.S. helps mitigate the impact of tariffs.' He added, 'With strict financial controls based on precise forecasting, we are steadily moving toward achieving our full-year targets as we conclude the first half of the year.' BMW Group believes tariff negotiations are still ongoing. CEO Oliver Zipse welcomed the tariff agreement reached between the EU and Trump but emphasized the importance of its swift implementation. Regarding the potential mechanism for balancing imports and exports in exchange for tariff reductions (which BMW Group hopes to benefit from), Zipse indicated that the company will continue to advocate for its establishment, though he also noted that the likelihood of reaching a comprehensive industry agreement appears low. This aligns with the views of executives from Volkswagen Group and Mercedes-Benz Group. In 2024, approximately 225,000 cars produced at BMW Group's Spartanburg plant in South Carolina are earmarked for export, while domestic sales in the U.S. are around 400,000 units. Zipse stated that the controversy surrounding tariffs has been 'exaggerated,' but acknowledged that tariffs have impacted BMW Group's financial performance, with separate tariffs imposed on steel and aluminum by Trump also affecting the entire automotive industry. EU tariffs on electric vehicles from China have also posed challenges for BMW Group, which produces electric Mini models through joint ventures in China.