German automaker BMW demonstrated remarkable resilience in the challenging market environment of the first quarter of 2025. Despite declining demand in China and the threat of US tariffs, the company managed to maintain solid profitability thanks to growing electric vehicle sales, particularly in the European market.
Key Financial Results Under Pressure, but Better Than Expected
Earnings before interest and tax (EBIT) reached €3.14 billion, representing a 23% decline compared to the same period last year. The automotive division margin was 6.9%, significantly exceeding analysts’ average expectation of 5.8%. This result falls at the upper end of the target range of 5-7%, signaling BMW’s resilience in a highly competitive global environment.
Total revenue for the first quarter reached €33.76 billion, a 7.8% decline compared to the previous year, primarily due to lower sales in China. Pre-tax profit decreased by 25.2% to €3.1 billion from last year’s €4.16 billion, with an EBT margin of 9.2% compared to 11.4% last year.
Free cash flow in the automotive division amounted to €413 million, representing a significant decrease from €1.28 billion in the first quarter of 2024. However, BMW remains on track to meet its annual target of more than €5 billion in free cash flow.
Electric Vehicles as a Clear Bright Spot
BMW recorded significant growth in the electric vehicle segment:
- Sales of fully electric vehicles increased by 32.4% compared to the same period last year
- In Europe, BEV sales growth was even more pronounced – 64.2%
- MINI electric vehicles significantly contributed to this growth with 22,798 units sold
- Electric vehicles and hybrids now account for 26.9% of all BMW deliveries
- The company reached significant milestones: 1.5 million fully electric vehicles sold since 2013 and 3 million electrified vehicles in total
This growth comes at a time when some European consumers are showing aversion to Tesla vehicles after Elon Musk became more involved in the Trump administration and supported far-right political movements in Europe.
Challenges in Key Markets
German automakers including BMW and Mercedes-Benz are struggling to regain market share in China, where local brands led by BYD dominate electric vehicle sales and continue to penetrate the luxury segment. BMW’s sales in China fell by 17% in the first three months of the year, representing the worst first-quarter performance since 2020.
At the same time, US tariffs pose an additional threat to profits. CEO Oliver Zipse stated in March that US tariffs on imports from Mexico, Canada, and China will cost the automaker approximately €1 billion this year. BMW is considering adding shifts at its US plant in Spartanburg, South Carolina, to help mitigate the impact of tariffs. However, the company considers some of the tariff increases temporary and expects reductions starting in July.
Future Outlook
BMW confirmed its full-year outlook, expecting slight growth in automotive demand with an increasing share of fully electric vehicles. The company forecasts an EBIT margin in the automotive division of 5-7% and a return on invested capital of 9-13%, with similar growth in its financial services segment.
“The first quarter was characterized by stable financial performance and effective cost management despite the challenging environment,” said Walter Mertl, BMW board member responsible for finance.
BMW also predicts that stabilizing inflation and moderate interest rate cuts will boost demand in several markets this year, which could partially offset the challenges the company faces in China and in relation to US tariffs.
