BMW braces for another year of tariff and China struggles

By Rachel More and Christina ‌Amann

BERLIN, March 12 (Reuters) - BMW ​sees ​little relief ahead with ongoing tariff costs and intense competition in China, warning on Thursday of a moderate decline in 2026 pre-tax earnings and a stagnation ‌in deliveries of its cars.

BMW's rivals Volkswagen and Mercedes also reported a weak ⁠2025 dominated by trade barriers, falling China sales and electrification missteps as market demand for EVs diverges in ‌key markets.

The outbreak of war in ‌the Middle East is rattling nerves further, fuelling supply chain concerns, driving up fuel prices and threatening demand in that region, a key market for premium marques like BMW ​and its subsidiary Rolls-Royce.

RISKS AHEAD IN 'UNSTABLE' WORLD

CEO Oliver Zipse said BMW was holding ground with a strategy to overhaul its model lineup and cut costs, but warned of uncertainty ahead.

"Our ⁠world remains unstable, and numerous risks will persist in the current financial year," he said after the company reported a 6.7% ​slump in 2025 pre-tax profit.

Shares in the company, Germany's most valuable carmaker, were trading 1.3% lower at 0916 GMT.

The impact of tariffs is expected ​to ease somewhat this year, with CFO Walter Mertl ‌hoping for new trade deals between Washington and its trade partners in the European Union, Mexico and Canada in the second half.

However, the company ⁠said it expects higher tariffs will deal a 1.25 percentage-point blow to the group's core automotive margin in 2026, which it expects to be in a range of 4 to 6%.

This follows 5.3% in ⁠2025 and 6.3% in 2024.

BMW's production presence in the United States - its largest plant is in Spartanburg, South ​Carolina - has cushioned the blow of U.S. tariffs somewhat, but it also faces EU tariffs on its Chinese-made fully electric Mini.

Group earnings before tax fell to 10.2 billion euros ($11.78 billion) in 2025 and are forecast to ‌fall further in 2026, by between 5% and 9.9%.

Deliveries are to stay on a par with 2025, a year that already saw a ‌12.5% sales decline in key market China.

In 2026, "China could reach last year's level," Mertl said.

The company however ⁠sees growth potential in the U.S. ‌and Europe, while it ramps up ​its 'Neue Klasse' suite of revamped cars with 40 launches planned this year and next.

($1 = 0.8659 euros)

(Reporting by Rachel More, editing by Miranda Murray, Tomasz Janowski and ‌Susan Fenton)

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