BMW Keeps 2026 Outlook Despite 25% Profit Drop Amid Tariff Pressure

BMW maintained its 2026 financial guidance after reporting a sharp decline in first-quarter pretax profit, signaling confidence in its ability to navigate rising U.S. tariffs, intense Chinese EV competition, and ongoing global market volatility. Despite the weaker earnings, investors reacted positively, sending BMW shares up nearly 5% in early trading.

The German luxury automaker posted first-quarter pretax earnings of 2.3 billion euros ($2.70 billion), down 25% from the previous year. However, the result still exceeded analyst expectations of 2.2 billion euros. Revenue fell 8.1% to 31 billion euros, slightly missing market forecasts as higher costs and competitive pressure weighed on performance.

BMW’s automotive EBIT margin came in at 5.0%, lower than the 6.9% recorded a year earlier but above analyst estimates of 4.7%. Analysts said the stronger-than-expected margin demonstrated BMW’s resilience in a difficult automotive environment marked by slowing demand and geopolitical uncertainty.

The company continues to face mounting pressure from Chinese automakers, which are rapidly expanding both in China and across Europe. At the same time, U.S. tariff threats and European Union duties on China-made EVs have added further challenges. BMW confirmed that tariffs reduced its automotive margin by 1.25 percentage points during the quarter, particularly impacting the Mini brand produced in China.

Unlike rivals Volkswagen and Mercedes-Benz, BMW has managed to implement cost-cutting measures without major layoffs. The automaker is improving factory efficiency and reducing investments while advancing its Neue Klasse platform, a major overhaul of its vehicle lineup focused on electric mobility and innovation.

BMW reiterated its full-year outlook, expecting a moderate decline in group earnings and forecasting an automotive operating margin between 4% and 6% for 2026. The guidance assumes no escalation in U.S. auto tariffs and expects geopolitical tensions in the Middle East to remain limited.

CEO Oliver Zipse downplayed recent tariff threats from U.S. President Donald Trump, describing them as part of ongoing trade negotiations with the European Union.