The China Mail - BMW sees tariffs easing and China stabilising in 2026

On the issue of tariffs, BMW finance boss Walter Mertl said he was "assuming there will be new agreements in the second half of the year".

Mertl said he expected "an agreement between the USA and Europe will be finalised, allowing us to import at 0 percent" as well as "positive agreements between the US, Mexico, Canada and other countries".

BMW has its largest plant in South Carolina and is the United States' largest car exporter, meaning it would stand to profit from the implementation of an EU-US deal unveiled last July that would see the EU rate on US cars reduced to zero.

All tariffs had in total cost the company roughly 1.75 billion euros in the past year, BMW said, hitting the margin at its automotive business by 1.5 percentage points on sales of 117.6 billion.

The firm pays duties on some imports to the US, including on some car parts, and the European Union levies tariffs on Chinese-made electric cars, hitting BMW's electric Mini.

BMW sees duties hitting its automotive margin by 1.25 percentage points for 2026, down from 1.5 in 2025.

But the company still forecasts an overall moderate drop in earnings before tax, hit by currency effects, raw material costs and the burden of reshaping its business in China amid fierce competition.

BMW shares were down almost 2 percent at market open but later made up most of the fall.

- China turnaround? -

In common with its German rivals, BMW has come under intense pressure from local competitors in China, the world's largest car market.

BMW's sales by volume in the country are now at their lowest level since 2017 and the carmaker last October lowered its profit outlook, warning of Chinese sales below expectations.

But there was perhaps light at the end of the tunnel, BMW said, forecasting stable sales in the country for the coming year rather than another fall.

"We're aiming for growth in all regions," BMW sales chief Jochen Goller said. "We want to grow in Europe and we want to grow in China in the coming years."

The group -- which apart from its namesake owns Mini and Rolls-Royce Motor Cars -- reported a three percent fall in annual profit on Thursday, far smaller than the double-digit plunges seen at rivals.

Net profit in 2025 fell to 7.45 billion euros ($8.6 billion), the Munich-based firm said, compared to earlier reported falls of over 40 percent at Mercedes-Benz and the Volkswagen Group.

BMW has taken a more flexible approach to electric vehicles (EVs) than some of its competitors, deciding early on to maintain petrol and diesel options for its customers.

Whereas firms from Porsche to Ford and Jeep- and Fiat-owner Stellantis have booked very costly hits measured in the billions following partial pivots away from EVs, BMW has so far avoided this at the same time as seeing its electric sales rise.

Addressing European Union rules that mandate higher sales of EVs over time, BMW CEO Oliver Zipse said emissions regulations should take a more expansive view of gases released during the car's production, not just its use.

"Let's look at the entire value chain from green steel via the supply chain and so on," he said.

"The current conversation is not wide-ranging enough, I don't think, it's going to lead to a significantly shrinking industry, this is very dangerous."

J.Thompson--ThChM