BMW Optimistic About U.S. Tariff Reduction, Sticks to 2025 Outlook

BMW (BMWG.DE) is projecting a decline in U.S. car tariffs beginning in July, a sentiment fueled by ongoing discussions with U.S. officials. This optimistic view contrasts sharply with many of its competitors and has enabled the German luxury car manufacturer to reaffirm its financial outlook for 2025. While the company acknowledges that tariffs imposed during the Trump administration will negatively impact its second-quarter earnings, executives refrained from quantifying the exact financial blow during a recent call with analysts.

The company’s confidence stems from its significant presence in the United States, where it operates its largest production plant and holds the position of the country’s top auto exporter by value. BMW has actively engaged in multifaceted discussions with U.S. policymakers, emphasizing the detrimental effects of the tariffs and advocating for their reduction.

"We are noticing that things are moving, developing, and being negotiated everywhere," stated Walter Mertl, BMW’s finance chief. "Accordingly, our reading, based on all the networks that we have at our disposal, is that we assume that something will change in July."

The potential reduction of tariffs would be a welcome development for BMW, which has invested heavily in its U.S. operations. CEO Oliver Zipse highlighted the substantial economic impact of BMW’s Spartanburg plant in South Carolina, which supports approximately 43,000 direct and indirect jobs and contributes over $26 billion annually to the economy.

"Knowing that we are the largest exporter, we are convinced that this will play a role in some appropriate form in the negotiations in the coming weeks," Zipse said. "We can already see that this will not be ignored, our large footprint," he added, while declining to provide specific details. He emphasized that BMW is deeply ingrained in the U.S. market and is communicating with all relevant stakeholders to articulate its position.

BMW’s unwavering commitment to its 2025 outlook stands in stark contrast to the actions of its rivals. Mercedes-Benz (MBGn.DE), Ford (F.N), and Stellantis (STLAM.MI) have all withdrawn their 2025 forecasts, citing the uncertainty generated by U.S. trade policy.

BMW’s 2025 outlook, initially provided in March, incorporated all tariffs announced up to that point. The company continues to project earnings before tax on par with 2024 and an operating margin of 5-7% for its automotive business.

While acknowledging the inherent difficulties in accurately estimating the precise impact of tariffs, BMW anticipates that "some of the tariff increases [will] be temporary, with reductions from July 2025."

The market reacted positively to BMW’s announcement. Shares in the company rose by 1.3% to 1011 GMT after it reported first-quarter earnings before interest and tax of 2.02 billion euros ($2.3 billion) for its automotive unit. This figure surpassed analysts’ average forecast of 1.85 billion euros in an LSEG poll.

Driven by robust order volumes and stringent cost management, the unit’s operating margin reached 6.9%, a slight decrease from the 8.8% recorded during the same period last year but exceeding the 6.3% predicted in the poll.

"In an environment where its peers have been withdrawing guidance left, right, and center, BMW’s decision to stick with guidance was well-received by the market," noted Russ Mould, investment director at AJ Bell. "Part of this is predicated on some tariffs going into reverse from July onwards – so investors will be able to judge from the summer whether or not the current forecasts remain credible."

However, BMW included a caveat, stating that its business performance in 2025 could deviate if tariffs increase or remain in place for longer than anticipated. The company also highlighted the potential risk of supply bottlenecks for specific parts or raw materials.

Despite the positive outlook and strong first-quarter results, BMW remains vigilant about the challenges posed by global economic uncertainties, including inflationary pressures, geopolitical instability, and the ongoing semiconductor shortage. The company is actively managing these risks through proactive supply chain management, flexible production planning, and a focus on cost optimization.

BMW is also investing heavily in electric vehicle (EV) technology and aims to have a fully electric model in every segment of the market by 2030. The company’s electric vehicle sales have been growing rapidly, and it expects this trend to continue in the coming years. This commitment to electrification is seen as a key driver of long-term growth and profitability.

The company’s confidence in its 2025 outlook is not solely based on the potential reduction of U.S. tariffs. BMW is also benefiting from strong demand for its vehicles in other key markets, including China and Europe. The company’s diversified geographic footprint provides a buffer against regional economic downturns and allows it to capitalize on growth opportunities around the world.

BMW’s ability to navigate the complexities of the global automotive market is a testament to its strong leadership team, its commitment to innovation, and its focus on delivering exceptional products and services to its customers. The company’s optimistic outlook for 2025 is a positive sign for the future of the luxury car industry and reflects BMW’s unwavering belief in its ability to succeed in a rapidly changing world. Furthermore, the first quarter results were bolstered by the unveiling of new models and trims, demonstrating the companies dedication to market growth.

($1 = 0.8803 euros)

(Reporting by Christoph Steitz and Nick Carey. Additional reporting by Christina Amann, Anika Ross and Paolo Laudani. Editing by Kirsti Knolle, Tomasz Janowski and Mark Potter)