The bosses of Europe’s largest carmakers will possible be sweating on the prospect of what a surprising Donald Trump election victory may imply for his or her already troubled sector. However for BMW, no less than, the prospect of extra commerce wars may very well be factor.
Oliver Zipse, the CEO of BMW, sought to minimize considerations about what a Trump presidency may 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 could be launched.
“They don’t take our automobiles. They don’t take our farm merchandise. They promote tens of millions and tens of millions of automobiles in america. No, no, no, they’ll should pay a giant worth.”
Goldman Sachs expects the Trump administration to implement tariffs on EU autos-related imports value $80 billion, chargeable for about 0.9% of EU exports. The financial institution has namechecked Volvo automobiles as going through the largest 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 income. 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 ‘benefit’
Talking to journalists following the corporate’s third-quarter earnings report, Zipse stated BMW “somewhat have a bonus” over different carmakers as a result of it has a “massive footprint in america for america.”
“On this respect, we shouldn’t be too nervous about what may occur,” Zipse stated.
“It’d truly provide us a profit.”
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 automobiles from its Spartanburg plant in South Carolina in 2023, with greater than half being exported to 120 nations. Zipse urged BMW is well-placed to pivot these fashions to U.S. clients to fulfill U.S. demand.
“There’s some pure cover-up in opposition to potential tariffs,” Zipse stated.
The prospect of a frostier buying and selling atmosphere between the U.S. and Europe is prone to take a backseat to BMW’s ongoing struggles in China.
BMW’s pre-tax income declined by 79.4% within the third quarter of 2024 in contrast with the identical interval within the earlier 12 months, having lower its steering in September. The carmaker cited ongoing challenges with an enormous 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 continuing disaster in the true property sector and a normal downturn in home 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 concerning 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 assertion stays that these tariffs will see no winner,” Zipse stated within the earnings name, arguing tariffs may result in a commerce struggle.
