BMW's Carmaking Margin Declines Amid US Tariffs and China Slump

BMW's automotive operating margin declined to 5.4% in Q2 due to US tariffs and a slump in China sales. Despite this, the company confirmed its full-year outlook of an auto margin of at least 5%. BMW has fared better in transitioning to battery-powered cars, with EV sales rising 17%. However, the company and its German peers are losing ground in China to domestic manufacturers. BMW is considering additional shifts at its largest factory in South Carolina to mitigate the impact of the US tariffs.

BMW AG's automotive operating margin declined to 5.4% in the second quarter, primarily due to the impact of U.S. tariffs and a slump in sales in China [2]. Despite this setback, the German luxury carmaker maintained its full-year outlook, projecting an auto margin of at least 5% [2].

The company's Q2 results reflect the ongoing challenges posed by the U.S. trade war. BMW expects tariffs to drag down its automotive segment's profit margin by 1.25 percentage points in 2025 [1]. The European Union's recent trade deal with the U.S. lowered duties on auto imports from the bloc to 15%, which, while lower than the previous 27.5% levy, remains significantly higher than the pre-Trump tariff of 2.5% [2].

BMW's Q2 margin of 5.4% was slightly below analysts' expectations of 5.5%, but still within its 2025 target range of 5.0% to 7.0% [1]. The company has been proactive in mitigating the impact of the tariffs, with plans to increase production at its largest factory in South Carolina [2].

Despite the challenges, BMW has shown resilience in its transition to electric vehicles (EVs). The company reported a 17% increase in EV sales, driven by strong demand for its electric Mini models [2]. However, the company and its German peers are facing increased competition in China from domestic manufacturers like BYD Co. [2].

BMW's ability to maintain its full-year outlook despite the challenges highlights the company's strong operational capabilities and strategic planning. As the company continues to navigate the complexities of the global trade environment and the shift towards electric vehicles, investors will be closely watching its progress.

References:
[1] https://www.marketscreener.com/news/bmw-maintains-guidance-but-forecasts-tariff-blow-to-auto-profitability-ce7c5fdcdd8ffe25
[2] https://www.bloomberg.com/news/articles/2025-07-31/bmw-s-carmaking-margin-declines-due-to-us-tariffs-china-slump