BMW keeps 2026 guidance, shrugs off tariff threat as profit beats expectations
By Rachel More
BMW's Financial Performance and Tariff Challenges
BERLIN, May 6 (Reuters) - BMW maintained its 2026 financial guidance on Wednesday, shrugging off a tariff-hike threat by U.S. President Donald Trump as a bargaining chip, as first-quarter earnings beat expectations despite falling 25%.
U.S. auto tariffs are already weighing heavily on BMW's margins at their current rate while fierce competition in China has put the German premium carmaker under pressure in its largest single market.
Tariff Threats and Industry Impact
Trump's announcement last week that he would raise the levy on EU auto imports from 15% to 25% rattled the German automotive industry which was already battling to absorb billions in additional levies on its cars.
But this is merely a threat intended to get the European Union to uphold its side of a trade deal, CEO Oliver Zipse said.
Shares in the company were up 4.7% following the results and his comments.
Core Margin and Profit Results
CORE MARGIN BEATS FORECAST
BMW beat key profit expectations for the quarter even as a narrowing core margin underscored continued pressure on its business.
The company reported first-quarter pretax earnings at 2.3 billion euros ($2.70 billion), exceeding analysts' forecast of 2.2 billion euros in a company-provided consensus.
BMW's EBIT margin in its core automotive business - a key metric for its success - stood at 5.0%, down from 6.9% a year earlier but ahead of analysts' forecast of 4.7%.
Group revenue missed expectations, falling 8.1% to 31 billion euros, after overall quarterly sales fell on weak demand in China.
Competitive Landscape and Outlook
Rivals Mercedes-Benz and Audi were also under pressure as Chinese automakers extend their lead in their home market — the world's largest — and push deeper into Europe, while U.S. tariff threats and conflict in the Middle East cloud the outlook further.
BMW continues to expect a moderate decline in its group result this year and a core operating margin in a range of 4% to 6%, after 5.3% in 2025.
As for the threatened tariff hike, Zipse showed understanding for Trump's position and expected the EU to reduce its own tariffs on U.S. imports to avoid an escalation.
"I understand this demand," said Zipse. "I am hopeful that it will be of some use."
Cost-Cutting Measures
COST CUTS ON COURSE
Like many carmakers, BMW is turning to cost reductions to offset pressures from tariffs and high raw material costs in a weak global automotive market.
Efficiency Strategies and Tariff Impact
Unlike Volkswagen and Mercedes, however, it has so far managed to do so without cutting jobs, focusing on factory efficiencies and reduced investment, having developed the Neue Klasse platform to overhaul its product portfolio.
Tariffs, including U.S. levies at their current rate but also an EU tariff on EVs made in China affecting BMW's Mini brand, had a 1.25-percentage-point impact on BMW's car margin in the first quarter.
($1 = 0.8522 euros)
(Reporting by Rachel More, Editing by Linda Pasquini and Bernadette Baum)
