BMW Stock: Profit Plunges Amid Global Challenges

BMW’s stock faced selling pressure as the German automaker reported a dramatic 31.4% drop in operating profit for the second quarter, falling to €2.66 billion despite maintaining its annual forecast. The luxury car manufacturer’s core automotive business suffered even more severely with a 40% profit decline, while its operating margin shrank from 8.4% to just 5.4%. These disappointing results came alongside an 8% revenue decrease to €33.93 billion, primarily attributed to increased US tariffs and weakening performance in the crucial Chinese market. The company’s after-tax profit for the first half of 2025 reached only €4.015 billion, significantly below the previous year’s €5.656 billion.

Management Remains Cautiously Optimistic

Despite these challenges, BMW’s leadership maintains its annual targets, predicting an automotive margin between 5% and 7%, with current performance at the lower end of this range. The company specifically identified a 1.25 percentage point margin loss due to tariff impacts alone, highlighting how even "moderate" trade barriers significantly affect export-dependent businesses like BMW. Management’s confidence stems from expectations of falling interest rates and stabilizing inflation across key markets, with electrified models projected to drive European growth while the company’s strong US manufacturing base potentially provides advantages over pure exporters.