BMW's quarterly profit down 25% as China, tariffs weigh
BMW Reports First-Quarter Earnings Amid Global Challenges
By Rachel More
Quarterly Financial Performance
BERLIN, May 6 (Reuters) - German premium carmaker BMW reported a sharp drop in first-quarter earnings as intense competition in China and tariff pressures weighed on performance, although it maintained its 2026 outlook for now.
Pretax Earnings and Revenue
The company said on Wednesday that quarterly pretax earnings fell 25% to 2.3 billion euros ($2.70 billion), slightly above analysts' forecast of 2.2 billion euros in a company-provided consensus.
Group revenue missed expectations, falling by 8.1% to 31.0 billion euros.
Industry Context and Competitive Landscape
Rival Performance and Market Pressures
Rivals Mercedes-Benz and Audi also reported a difficult start to 2026, as the threat of higher U.S. tariffs looms and Chinese competitors assert their dominance in the world's largest auto market while starting to build their market share in Europe.
Cost Reduction Strategies
BMW's Approach Compared to Competitors
Like many carmakers, BMW is turning to cost reductions to offset pressures from tariffs and high costs for raw materials in a globally weak automotive market.
Unlike Volkswagen and Mercedes, however, it has so far managed to do so without cutting jobs.
Margins and Tariff Impact
EBIT Margin Details
BMW's EBIT margin in its core automotive business stood at 5.0% in the first quarter, down from 6.9% a year earlier but ahead of analysts' forecast of 4.7%.
Tariff Effects on Profitability
Tariffs, including U.S. levies 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.
Outlook and Future Risks
Guidance for 2026
The company maintained its full-year guidance on Wednesday, forecasting a moderate decline in its group result. BMW's core operating margin is seen in a range of 4% to 6% after 5.3% in 2025.
Potential Tariff Increases and Geopolitical Risks
The outlook does not incorporate a potential increase in U.S. auto tariffs, which President Donald Trump threatened on Friday to raise to 25% from the current 15%. It also assumes the Middle East conflict "will not be enduring," the company said in a statement.
Additional Information
($1 = 0.8522 euros)
(Reporting by Rachel More, Editing by Linda Pasquini and Louise Heavens)
