BMW Adjusts 2025 Outlook Amid China Slowdown and Tariff Uncertainty
BMW has revised its 2025 outlook, citing slower growth in China and unresolved US-EU tariff reductions. Despite this, the company expects free cash flow in the automotive segment to exceed €2.5bn.
BMW's group earnings before tax are projected to decline slightly. The company's dividend payout ratio remains steady at 30% to 40% of net income. However, BMW's automotive EBIT margin is now forecast to be in the range of 5% to 6%.
The company's projected return on capital employed (automotive) is now 8% to 10%. BMW expects its sales expectations for the Chinese market in the fourth quarter to be reduced. The company cited a reduction in commissions from local Chinese banks, impacting dealer profitability. Chinese banks and insurers have reduced their commissions for brokering financial and insurance products to BMW, leading to additional financial support needed for dealers in China.
BMW assumes reimbursements of customs duties will not be received in 2025 but in 2026. The company's assumption of tariff reductions from the US to the EU has not materialized, leading to a lowering of its 2025 earnings guidance.
BMW's expected free cash flow in the automotive segment for 2025 remains above €2.5bn. Despite challenges in China and unresolved tariff issues, the company is prepared for these changes and continues to support its dealers and maintain a steady dividend payout ratio.
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