BMW anticipates a moderate decline in pre-tax earnings for 2026, citing ongoing tariff costs and intense competition in China. The company reported a 6.7% slump in 2025 pre-tax profit and expects deliveries to remain stagnant.
Key Takeaways
BMW anticipates a moderate decline in pre-tax earnings for 2026 due to tariff costs and intense competition in China. The company reported a 6.7% slump in 2025 pre-tax profit and expects deliveries to remain stagnant.
- BMW forecasts a 5% to 9.9% drop in group earnings before tax for 2026, following a decline to €10.2bn in 2025.
- The company plans to launch 40 new models under its 'Neue Klasse' suite this year and next.
- BYD is launching a premium EV in Europe with advanced charging capabilities, posing competition for BMW.
- Volkswagen has begun mass production of its first model developed jointly with Xpeng in China.
- Tesla's China-made EV sales rose 91% in February, while BYD experienced significant declines.
The outbreak of war in the Middle East has further rattled nerves, driving up fuel prices and threatening demand in that region, which is crucial for premium marques like BMW and its subsidiary Rolls-Royce. CEO Oliver Zipse emphasized the company's strategy to overhaul its model lineup and cut costs but warned of uncertainty ahead.
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 EU, Mexico, and Canada. However, higher tariffs are projected to reduce the group’s core automotive margin by 1.25 percentage points in 2026.
BMW's production presence in the US has somewhat cushioned the blow of US tariffs, but it also faces EU tariffs on its Chinese-made fully electric MINI. Group earnings before tax fell to €10.2bn (R194.82bn) in 2025 and are forecast to fall further in 2026 by between 5% and 9.9%. Deliveries are expected to stay on par with 2025, a year that saw a 12.5% sales decline in key market China.
Despite these challenges, BMW sees growth potential in the US and Europe as it ramps up its 'Neue Klasse' suite of revamped cars, with 40 launches planned this year and next.
In related developments, BYD is set to launch a premium electric vehicle in Europe that can charge in just minutes, far faster than anything on the market today. The Denza Z9GT model boasts a range of up to 800 km (497 miles) and uses 'flash charging' capabilities that allow it to charge from 10% to 70% in five minutes. BYD's sales grew almost 270% last year, but the company has been struggling in China due to the end of purchase tax exemptions on EVs.
Volkswagen has begun mass production of its first model developed jointly with Chinese EV maker Xpeng, as part of its strategy to regain market share in China. The ID. UNYX 08 electric SUV is emblematic of Volkswagen's 'in China, for China' strategy, which prioritizes local development and quicker turnaround times.
Tesla's China-made EV sales rose 91% in February, while BYD experienced significant declines. Tesla's combined January and February sales in China-made EVs rose by more than 35%, regaining some lost ground to BYD. However, BYD remains the world's largest EV seller on a calendar-year basis.
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