Berlin (AFP) – German automaker BMW warned Friday that it would take a big hit from trade wars between the United States, China, and Europe this year, on top of weak Chinese demand, after profits plunged in 2024. Finance chief Walter Mertl said at the presentation of BMW’s annual results that US tariffs on steel and aluminium, in place since Wednesday, would hit the group’s profit margins. CEO Oliver Zipse put the total cost of tariffs — including European Union levies on cars imported for China — at one billion euros ($1.08 billion) in an interview with Bloomberg TV.
Overall, BMW said that it expected earnings before taxes in 2025 to be at the same subdued level as in 2024, while warning that much depended on rapidly changing trade policies. In January, Zipse called on the EU to lower its tariff on American cars in an effort to smooth tensions. That same month, BMW filed a legal challenge against the EU’s tariffs on Chinese electric cars. The Munich-headquartered group makes cars and motorbikes all over the world, including in China.
Speaking at the results conference, Joachim Post, responsible for supply chains at BMW, said the group’s global network meant that it would try to be “flexible”, reducing costs “and even avoiding customs duties where we can.”
For 2024, the group’s net profit fell 37 percent to 7.7 billion euros ($8.3 billion), while revenues were down over eight percent to 142.4 billion euros. That was partly down to issues with a braking system that affected over 1.5 million vehicles, as well as issues in China, where European carmakers have been losing ground to local rivals such as BYD. Vehicle deliveries in China were down 13.4 percent last year, while total deliveries of the BMW group, which also includes Mini and Rolls-Royce, fell just four percent.
US President Donald Trump’s aggressive trade policy, which aims to boost US manufacturing, is a spanner in the works for firms like BMW, even though it makes cars in the United States. Trump hit Canada and Mexico with tariffs before partially rolling them back, including a temporary exemption to most auto imports after an outcry from carmakers in the US who often supply parts from their neighbours. Trump has also threatened to hit the European Union with 25-percent duties, which could hammer the region’s automakers. BMW said its latest guidance for 2025 takes into account tariff moves made so far. It warned that further increases in duties “could have a negative impact.”
© 2024 AFP
