German luxury automaker BMW has reported a significant decline in its financial performance for the fiscal year 2024, with net profit dropping by 36.9% to €7.7 billion ($8.3 billion) compared to €12.16 billion in 2023.The company's revenues also decreased by over 8%, totaling €142.4 billion for the year.
Several factors have contributed to this downturn:
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Global Vehicle Recall: BMW faced a recall affecting 1.5 million cars due to brake issues, which significantly impacted its profitability.
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Weak Chinese Market: The company experienced a 13.4% decline in vehicle deliveries in China, its largest market, as local electric vehicle manufacturers like BYD and Xiaomi captured market share with affordable, high-tech EVs.
Trade Tensions and Tariffs: Escalating trade tensions, particularly between the United States and the European Union, have led to new tariffs impacting BMW's operations. The company forecasts a €1 billion hit to its 2025 profits due to these tariffs, which include duties on Chinese electric vehicle imports into the EU and U.S. aluminum tariffs.
In response to these challenges, BMW has revised its 2025 automotive business profit margin forecast to 5-7%, down from the previous consensus of 7.3%.
The company acknowledges that further increases in duties could have additional negative impacts on its financial performance.Despite these setbacks, BMW remains committed to growth and is proceeding with its plans to introduce a new line of electric vehicles, the "Neue Klasse," later this year, aiming to counteract declining sales and strengthen its position in the evolving automotive market.
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