Bayerische Motoren Werke Aktiengesellschaft (ETR:BMW) executives used the Q&A portion of the company’s quarterly call to address investor and media questions ranging from U.S. tariff risks and Middle East disruption to China demand trends and ramp-up plans for the Neue Klasse lineup.
Tariffs: “Just a threat” but timing risk remains
Asked about former U.S. President Donald Trump’s comments on a potential 25% tariff on imported cars, CEO Oliver Zipse said the situation should be read as a threat rather than a finalized policy step, noting it had not yet become an executive order.
“For us, this is not surprising,” Zipse said of the renewed tariff threat, adding that he believed the “accelerated implementation” of the original tariff could be “just a matter of days or weeks,” while also arguing that a tariff escalation would “damage both sides.” He said BMW remained “very optimistic” the threat would help move implementation of the deal.
Later, Zipse reiterated his optimism, saying the “pressure on the EU is mounting.” He said BMW continued discussions with the U.S. administration in recent weeks and suggested a potential “offset deal” could be reached by year-end. Zipse outlined a model in which “for importers, which are at the same time exporters, there will be an offset,” adding: “For each exported vehicle, you’re allowed to import one.” He also said the export-oriented model used by BMW is supported by the U.S. administration, contingent on the EU fulfilling its side of the arrangement.
Middle East impact described as limited; volume share under 1.5%
CFO Walter Mertl said the impact from the conflict in the Near East on sales volumes was limited and consistent with BMW’s forecast, characterizing it as temporary. “You hardly can see an effect in Q1,” he said, adding that the issue affects the broader global economy and that the company assumes a solution will be found soon.
In a follow-up, Mertl quantified the region’s importance to BMW’s sales base, stating: “The volume share of the Middle East is less than 1.5%.” He also said BMW is “always prepared for mitigations” in scenario planning.
China: subsidies withdrawal shapes market; BMW cites product and dealer actions
On China, Zipse said the market is changing significantly and highlighted the withdrawal of subsidies for “pure e-mobility” as a key driver affecting local manufacturers, particularly in the first quarter. He described China as BMW’s “biggest market” and a central technology driver, while emphasizing the need to view quarterly trends in context.
Zipse said BMW expects the market to normalize, noting that in large markets domestic brands tend to become dominant players “just like in Europe and the U.S.” He called Chinese manufacturers “highly innovative,” while maintaining that BMW “firmly believe[s] that China will remain our biggest market also in the future.”
Mertl provided additional market detail, citing an overall China market decline of “17.5%” in the first quarter and noting that CPCA’s annual forecast had been revised to “minus 7.6%,” with the possibility it could move to “down to 8%.” He argued BMW’s positioning benefited from “openness to technology” and brand strength, and he detailed steps taken over the past 18 months to improve performance in China:
- Dealer network changes, including closing some dealers and opening others
- Dealer training to improve performance
- Product measures and list price reductions; he said transaction prices “increased slightly” in Q1
Looking ahead, Mertl said BMW expects to be “on eye level” with Chinese offerings as Neue Klasse models roll out, and said demand for models such as the i7, iX3 and i3 was positive.
Neue Klasse demand and production: pre-orders, added shifts, and ramp-up focus
Zipse said BMW was “very happy with the incoming orders” for the iX3 and reported interest in the i3 even before it reaches the market. He said BMW can fulfill demand, though “waiting times are a bit too long still,” while stressing they are “not infinitely long.”
He also said BMW has added new shifts and that the same will happen in Munich once the i3 enters production. Zipse added that “every third full electric vehicle ordered in Europe is an iX3,” describing them as “real pre-orders with advance payments.” He said iX3 demand was bringing in customers from competitors and that the plant performance matched expectations.
Asked about the durability of premium automakers’ business models amid margin pressure, Zipse said BMW’s strategy is “antifragile” and built on technology openness across powertrains and global balancing across regions. He highlighted factors he considers critical for long-term success:
- Long-term quality and residual value
- System integration and the overall driving experience
- Ramp-up capabilities; Zipse said BMW has not had to postpone any ramp-up “not even by one day”
Financial items: tariff burden magnitude, FCA provisions, and Munich cost efficiency
In response to a calculation question, Mertl confirmed that a 1.25 percentage point figure equated to “around EUR 300 million,” specifying it related to “sales in the automotive industry.”
Mertl also addressed provisions tied to the “FCA risk scheme,” saying BMW had carried a “slight to medium EUR 3-digit amount” as of Dec. 31, 2025, and had to top it up to a “medium to a high three-digit number in the millions.” He said the additional provisions were reflected in operating costs and financial services profit-and-loss accounts, and argued the situation was “disproportionate and still unfair,” while noting it would not make sense to file an opposition without participation from banks and key countries in the U.K.
On operational costs, Mertl responded to a question about a “10%” cost topic in Munich, saying improved efficiency would come from “the overall setup” associated with new products, including the newest technologies and better working processes, which “allows us to reduce the costs.”
Near the end of the session, Mertl said BMW still sees early-year conditions as a trough, noting that first-quarter performance was in line with what the company had indicated in March. He said currencies would remain an additional burden in the second quarter and pointed to increased Neue Klasse rollout as a key source of momentum for the second half of the year.
The call concluded with remarks marking what the moderator described as Zipse’s last quarterly call after 35 years at BMW and more than a decade on the board of management, crediting him with initiating the Neue Klasse program and advocating for “technology neutrality.”
About Bayerische Motoren Werke Aktiengesellschaft (ETR:BMW)
Bayerische Motoren Werke Aktiengesellschaft, together with its subsidiaries, engages in the development, manufacture, and sale of automobiles and motorcycles, and spare parts and accessories worldwide. It operates through Automotive, Motorcycles, and Financial Services segments. The Automotive segment engages in the development, manufacture, assembling, and sale of automobiles, spare parts, accessories, and mobility services under the BMW, MINI, and Rolls-Royce brands. The Motorcycles segment develops, manufactures, assembles, and sells motorcycles and scooters under the BMW Motorrad brand, as well as spare parts and accessories.
