Categories: Business & Economy

BMW cuts annual guidance on weak Chinese sales, tariff costs

BMW AG lowered its financial guidance for the year over persistently weak sales in China and tariff-related costs, highlighting the difficulties facing Germany’s auto industry.

The luxury car maker now expects pre-tax profits to fall slightly in 2025 from last year, down from an earlier expectation of a bottom line. BMW also reduced its projection for automotive free cash flow.

Western manufacturers are losing ground in China to local rivals such as Byd Co. and Xiaomi Corp., which offer feature-packed electric vehicles at low prices. Fierce competition in the world’s largest auto market is squeezing profit margins, also hitting Volkswagen AG’s Audi and Porsche AG. Earlier on Tuesday, Mercedes and BMW released third-quarter results that showed a decline in unit sales in China.

Lagging demand for luxury electric vehicles is hitting automakers who are already dealing with muted growth in Europe and tasks in the United States. Several of them have corrected course by cutting costs or switching funds into combustion engine and hybrid models.

BMW now expects free cash flow of 2.5 billion euros ($2.9 billion), down from 5 billion euros previously. The changes to the guidance are related in part to payments to support dealers in China, the automaker said in a statement Tuesday evening.

The Munich-based company said it also had to change assumptions related to tariffs, adding that it now expects tariff refunds from the United States and German authorities totaling a “high triple-digit figure” to be paid next year rather than in 2025. The United States lowered it last month ago.

BMW is betting its next-generation electric vehicles can help bolster sales. Last month the company revealed the IX3 sport utility vehicle, the first in its Neue Klasse line, the manufacturer spent well over 10 billion euros on it.

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Michael Johnson

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