BMW is leaning into the idea that product is king, even amid current market challenges—with the chief executive of the company contending that the fallout from President Trump’s tariffs is “exaggerated.”
The details: The comment by the German automaker’s chief executive, Oliver Zipse, was made, with the company reporting that it’s holding firm on its annual guidance—indicating that it expects to be able to mitigate the new tariff landscape, with minimum blowback, after making a few adjustments.
BMW—which now faces 15% duties on its U.S. imports—said tariffs will reduce its 5 to 7% operating profit margin target range by 1.25 percentage points.
The company’s operating margin stood at 5.5 per cent in Q2, including a 2-percentage-point impact from tariffs.
BMW expects some impact from the EU’s anti-subsidy tariff on Chinese electric vehicle imports, which includes a 30% tariff on some models sold in Europe.
Analysts estimate that BMW could be impacted by up to €1.5bn ($1.7 billion) for the year, given the reduced operating profit margin—with the automaker’s net profit dropping 32% in Q2 to €1.8bn ($2.3 billion) from a year earlier.
What they’re saying: “I think this tariff discussion is way exaggerated, and also its effects on the industry. What’s more important is the question, are the products attractive?” said Zipse.
Why it matters: Zipse’s optimism about the company’s outlook amid the tariffs should provide the automaker’s U.S. dealer body and other stakeholders with reassurance amid some challenging market conditions.
Between the lines: BMW’s plant in Spartanburg, South Carolina (the automaker’s largest manufacturing facility globally) will play a key role in the company’s strategy to navigate the tariffs.
In 2024, BMW exported cars worth €10bn ($1.7 billion US), accounting for roughly half of the vehicles produced at the plant.
Trump has also offered some rebates to carmakers that produce their vehicles in the U.S. to offset the costs of his broader levies.
When it comes to product—which Zipse noted is most important—BMW’s strategy includes the launch of 40 cars by the end of 2027, with a wide range of powertrains, from gasoline and diesel engines to plug-in hybrids and fully electric models.
Bottom line: BMW is emphasizing that strong, attractive products will carry the company through market challenges like tariffs, which CEO Oliver Zipse downplays as "exaggerated" in their impact. Despite near-term profit pressures from U.S. and EU tariffs, BMW is holding firm on its full-year outlook, banking on its flexible production strategy (notably its Spartanburg plant) and an aggressive product rollout to mitigate any fallout.
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