The bosses of Europe’s largest carmakers will doubtless be sweating on the prospect of what a shocking Donald Trump election victory might imply for his or her already troubled sector. However for BMW, at the very least, the prospect of extra commerce wars may very well be an excellent factor.
Oliver Zipse, the CEO of BMW, sought to minimize considerations about what a Trump presidency might imply for the automaker amid expectations that his administration would unleash wide-ranging tariffs on imports from Europe.
Trump focused European producers in feedback made the week earlier than the November 5 election, giving a powerful indication that recent import tariffs can be launched.
“They don’t take our cars. They don’t take our farm products. They sell millions and millions of cars in the United States. No, no, no, they are going to have to pay a big price.”
Goldman Sachs expects the Trump administration to implement tariffs on EU autos-related imports value $80 billion, accountable for about 0.9% of EU exports. The financial institution has namechecked Volvo vehicles as going through the most important revenue headwinds from the transfer, adopted by Mercedes, Porsche, BMW, and Volkswagen.
Shares in BMW declined 6.6% between markets closing on Tuesday and their closure on Wednesday, following a double whammy of Trump’s election and disappointing earnings. Shares rebounded by 2.7% this morning. BMW’s German rivals Volkswagen, Mercedes-Benz, and Porsche additionally confronted falling valuations on Wednesday.
BMW’s tariff ‘advantage’
Talking to journalists following the corporate’s third-quarter earnings report, Zipse mentioned BMW “rather have an advantage” over different carmakers as a result of it has a “big footprint in the United States for the United States.”
“In this respect, we shouldn’t be too nervous about what might happen,” Zipse mentioned.
“It might actually offer us a benefit.”
BMW makes its X5, X6, and X7 fashions within the U.S., whereas the X3 has simply began manufacturing there. Deliveries within the U.S. declined 92% within the third quarter of 2024 in contrast with the identical interval in 2023.
The corporate produced 410,000 vehicles from its Spartanburg plant in South Carolina in 2023, with greater than half being exported to 120 nations. Zipse advised BMW is well-placed to pivot these fashions to U.S. prospects to fulfill U.S. demand.
“There’s some natural cover-up against possible tariffs,” Zipse mentioned.
The prospect of a frostier buying and selling surroundings between the U.S. and Europe is prone to take a backseat to BMW’s ongoing struggles in China.
BMW’s pre-tax earnings declined by 79.4% within the third quarter of 2024 in contrast with the identical interval within the earlier 12 months, having lower its steerage in September. The carmaker cited ongoing challenges with a large recall attributable to a defective braking system.
Nonetheless, it’s in China the place extra existential threats persist.
BMW’s deliveries in China plunged 30% in contrast with the third quarter of 2023. The carmaker cited “the ongoing crisis in the real estate sector and a general downturn in domestic demand” as the important thing components behind its decline within the nation, in addition to elevated competitors from home automakers and different international gamers.
Whereas he was comparatively sanguine in regards to the prospect of recent tariffs coming from the U.S., Zipse doubled down on his opposition to tariffs imposed by the EU on Chinese language EVs, which can see some imports slapped with a 48% tariff.
“Our statement remains that these tariffs will see no winner,” Zipse mentioned within the earnings name, arguing tariffs might result in a commerce struggle.
