BMW Confirms Guidance on Sustained Demand — Update

By Dominic Chopping

BMW backed its full-year guidance as sustained demand for its cars continues, striking a more upbeat tone than many of its peers.

In recent weeks, European peers Mercedes-Benz, Volvo Car, Volkswagen, Audi, Porsche and Stellantis have all either lowered their expectations for the year due to mounting tariff costs and uncertainty, or scrapped guidance altogether.

But BMW said Thursday that it expects increasing demand in many markets in 2025, driven by a stabilizing inflation rate and further moderate interest-rate cuts.

Between April and June, deliveries of BMW, Mini and Rolls-Royce vehicles to customers were on par with the previous year's level, and the company said it had sales growth in all regions except China.

Retail sales in the quarter were especially strong in Europe, with growth of 10% on year. The European order intake for BMW remains strong, with an order bank reaching well into the fourth quarter, it added.

U.S. retails sales grew by 1.4% but fell nearly 14% in China.

Earnings in the automotive business declined by around 1.1 billion euros ($1.25 billion) compared with the second quarter of 2024, with more than half of this difference due to the tariff hit.

"As expected, tariffs weighed significantly on financials in the second quarter," financial chief Walter Mertl said.

The U.S. and European Union recently agreed to a trade deal that means a 15% tariff is applied to European cars imported to the U.S., a drop from the 27.5% that had applied, but far above the 2.5% that was in effect before trade tensions escalated.

BMW executives said on a media call Thursday that the EU tariff on vehicles made in the U.S. will come down to 0%, from 10% currently, which will act as a significant mitigating factor to its overall tariff burden. The company imports around 90,000 vehicles into Europe from its U.S. plant, according to Bank of America's Horst Schneider.

Chairman Oliver Zipse said it could also be possible to negotiate a separate deal with the U.S. administration aimed at reducing the tariff it pays by offsetting the number of vehicles it imports into the country with what it produces in the U.S. for export.

For the year as a whole, it expects a tariff-related impact of around 1.25 percentage points on the earnings before interest and taxes margin in its automotive business. It had previously expected a 1 percentage point impact this year from trade tensions between the U.S., China and the European Union.

The German automaker still forecasts flat earnings compared with 2024 and an automotive EBIT margin--a closely watched measure of profitability for its core carmaking segment--of 5% to 7%. It also still expects sales to grow slightly.

The company reported an EBIT margin at its automotive unit of 5.4% in the quarter, down from 8.4% a year earlier, but within the full-year 5% to 7% target range.

The margin includes the negative effects from tariffs, which amounted to around 2 percentage points in the quarter.

Group EBIT fell to 2.66 billion euros from 3.88 billion euros. A company-compiled consensus had EBIT at 2.64 billion euros.

Revenue fell 8.2% to 33.93 billion euros.

Write to Dominic Chopping at dominic.chopping@wsj.com