BMW's half year profit falls 29% amid tariffs and China challenges

BMW reported a sharp drop in first-half profits on Thursday, weighed down by US tariffs, currency headwinds from the dollar and challenging business conditions in China.

The Munich-based automaker posted a profit after tax of €4 billion ($4.6 billion), down 29% from the same period last year and marking the third consecutive first-half decline for the company.

Despite the setback, BMW's profit fall was less severe than that of some German rivals. Volkswagen and its Audi unit each lost more than a third of their earnings, while Mercedes-Benz's profit dropped by more than half.

BMW did not disclose the exact cost of US tariffs for the first half. However, it expects tariff-related costs — including a 31% duty on its electric Minis imported from China to the EU — to reduce its automotive segment margin by about 1.25 percentage points this year, potentially costing the company a figure in the billions.

Rival Audi recently estimated its own tariff burden at around €600 million. BMW, by contrast, operates a US plant that builds roughly half of the vehicles it sells in the country. Another 200,000 vehicles are exported to other markets.

CFO: US footprint helps limiting tariff impact

"Even despite higher tariffs, the BMW Group's business model remains intact," chief financial officer Walter Mertl said. "Our footprint in the US is helping us limit the impact of tariffs," he added.

The company could benefit if tariffs on US car exports to Europe are lowered from 10% to zero, as currently being discussed. But that would fall well short of offsetting the 15% US tariffs on cars shipped from Europe.

Despite these challenges and intense competition in China, especially in the electric vehicle segment, BMW maintains its full-year guidance, targeting a pre-tax profit roughly on par with last year's €11 billion. With €5.7 billion in pre-tax profit already booked in the first half, the company is on track to meet this goal.

Earlier this month, BMW's sales figures had already suggested the company might weather the downturn better than its rivals.

Unlike Mercedes and Audi, BMW's deliveries held nearly steady at just over 1.2 million vehicles in the first half. However, revenue fell 8% to €67.7 billion, the company said.