A worker assembles a BMW engine in the BMW engine factory in Steyr, Austria April 18, 2023. REUTERS
BERLIN, May 6 (Reuters) – German premium carmaker BMW reported a sharp drop in first-quarter earnings as intense competition in China and tariff pressures weighed on performance, although it maintained its 2026 outlook for now.
The company said on Wednesday that quarterly pretax earnings fell 25% to 2.3 billion euros ($2.70 billion), slightly above analysts’ forecast of 2.2 billion euros in a company-provided consensus.
Group revenue missed expectations, falling by 8.1% to 31.0 billion euros.
Rivals Mercedes-Benz and Audi also reported a difficult start to 2026, as the threat of higher U.S. tariffs looms and Chinese competitors assert their dominance in the world’s largest auto market while starting to build their market share in Europe.
Like many carmakers, BMW is turning to cost reductions to offset pressures from tariffs and high costs for raw materials in a globally weak automotive market.
Unlike Volkswagen and Mercedes, however, it has so far managed to do so without cutting jobs.
BMW’s EBIT margin in its core automotive business stood at 5.0% in the first quarter, down from 6.9% a year earlier but ahead of analysts’ forecast of 4.7%.
Tariffs, including U.S. levies but also an EU tariff on EVs made in China affecting BMW’s Mini brand, had a 1.25-percentage-point impact on BMW’s car margin in the first quarter.
The company maintained its full-year guidance on Wednesday, forecasting a moderate decline in its group result. BMW’s core operating margin is seen in a range of 4% to 6% after 5.3% in 2025.
The outlook does not incorporate a potential increase in U.S. auto tariffs, which President Donald Trump threatened on Friday to raise to 25% from the current 15%. It also assumes the Middle East conflict “will not be enduring,” the company said in a statement.
Reporting by Rachel More, Editing by Linda Pasquini and Louise Heavens