Bayerische Motoren Werke Aktiengesellschaft (ETR:BMW) executives used the company’s 2025 earnings call to highlight what they described as a resilient operating model, solid profitability despite tariff and currency headwinds, and an accelerating product rollout tied to the company’s “Neue Klasse” technology platform.
Chief Executive Officer Oliver Zipse said 2025 “set our course for the future,” pointing to group earnings of more than EUR 10 billion, sales growth versus the prior year, continued expansion in electrified vehicles, and early progress with Neue Klasse. CFO Walter Mertl said the year was heavily impacted by tariffs, foreign exchange movements—particularly in the second half—and an “intense market situation” in China, but added that cost actions and flexible global structures helped BMW deliver on key performance indicators.
2025 sales: growth in Europe and the U.S., tougher conditions in China
China remained BMW’s largest single market, but Zipse said sales there fell short of the company’s expectations amid “intense” competition. Mertl said the BMW brand maintained a stable monthly run rate of around 50,000 vehicles throughout the year in China, and he described actions to consolidate dealer structures and address pricing to underpin stability. Excluding China, Mertl said global group sales grew 5.9% in 2025.
Brand-level highlights discussed on the call included:
- BMW brand: Zipse said the brand maintained its position as the global number one in its segment, with strong demand for models including the X1, X3, X5, and the 3 Series and 5 Series.
- BMW M: Sales increased for the fourteenth consecutive year, reaching an all-time high of more than 213,000 vehicles delivered. Zipse cited the BMW M5 and M5 Touring and the X3 M50 as key drivers.
- MINI: Sales increased by nearly 18% year over year, with the MINI Countryman accounting for over 32% of the brand’s volume. Zipse said MINI delivered more than 100,000 all-electric models for the first time—more than one in three MINIs delivered.
- Rolls-Royce: Deliveries remained at a high level comparable to the prior year, while the value and number of bespoke requests increased. Zipse said the Goodwood site is being modernized and expanded to provide more space for bespoke and coach-built products.
- BMW Motorrad: Despite a global decline in motorcycles above 500 cc, Zipse said the brand delivered more than 200,000 vehicles for the fourth year in a row, supported by models including the R 1300 GS and F 900 GS.
Electrification mix and CO₂ performance
Zipse said demand for combustion-engine vehicles remained stable while sales of all-electric and electrified vehicles continued to grow, reinforcing BMW’s “technology open” approach. The company said it delivered more than 640,000 electrified vehicles in 2025, representing about 26% of total sales, with all-electric vehicles making up around 18%. Mertl provided updated figures of 642,000 electrified vehicles delivered (up 8.2%), including 442,000 battery-electric vehicles for an almost 18% share.
Europe was highlighted as a leading region for electrified adoption, with electrified vehicles representing over 40% of sales. Plug-in hybrids were described as being in strong demand, and Zipse argued they are not just a bridge technology but an important option for many customers globally.
On regulatory compliance, BMW said it “significantly outperformed” the EU’s 2025 fleet CO₂ targets through its own efforts. Based on preliminary internal calculations cited by Zipse and repeated by Mertl, BMW achieved fleet emissions of 90 g CO₂ per kilometer in Europe in 2025, which Mertl said was 2.9 g below the relevant target. Executives emphasized they did not need pooling arrangements or multi-year averaging.
Both Zipse and Mertl argued for a more holistic approach to emissions accounting that considers the entire vehicle life cycle and also recognizes potential reductions from the existing fleet. Mertl said European fleet emissions regulations focus only on the use phase and do not recognize full reduction potential across the value chain. He advocated for crediting CO₂ reductions achieved using sustainable fuels such as e-fuels and “carbon-neutral fuels such as HVO 100,” suggesting credit could begin as early as 2027 without caps on gram-per-kilometer values.
Financial results: stable margin, tariffs and FX headwinds, cost reductions
Mertl said BMW delivered a stable group EBT margin of 7.7%, unchanged from 2024, with group earnings before tax of EUR 10.24 billion. Group revenues totaled EUR 133 billion, while EBT declined 6.7% in the single-digit range. Mertl added that earnings per share “rose slightly” year over year.
By segment, BMW reported:
- Automotive: EUR 6.3 billion in earnings with an EBIT margin of 5.3%.
- Motorrad: EBIT of EUR 178 million with a margin of 5.7%.
- Financial Services: EUR 2.4 billion in EBT and a return on equity of 14.3%.
Within automotive, revenues were nearly EUR 118 billion, down 5.9% from 2024. Mertl said about half of the decline was due to negative currency effects, with the remainder mainly driven by global pricing pressure. He quantified a EUR 600 million headwind from the net balance of currency and raw material positions and said adverse FX conditions were expected to carry into the first half of the current year, particularly Q1.
Mertl also detailed profitability pressures and offsets. Compared to 2024, the net effect of volume, model mix, and pricing weighed on automotive EBIT by EUR 1.8 billion, while pricing alone was a EUR 2 billion headwind. He said the overall mix effect was positive, supported by a strong mid-class share including 5 Series growth and record BMW M performance.
Cost reductions were a central theme. Mertl said BMW achieved an “overall auto EBIT tailwind” of approximately EUR 2.5 billion in 2025 by reducing costs across R&D, SG&A, and manufacturing and material costs. R&D expenses fell nearly EUR 800 million year over year, SG&A savings were EUR 900 million, and there was a “high three-digit million” saving in manufacturing and material costs.
Tariffs were described as a major drag. Mertl said tariffs reduced the automotive EBIT margin by approximately 1.5 percentage points in 2025. Without the full-year tariff burden of about 1.5 percentage points, he said both group earnings and automotive EBIT would have been above the prior year.
Cash flow and capital returns
BMW reported automotive free cash flow of EUR 3.2 billion for 2025, in line with its expectation of above EUR 2.5 billion. Mertl said working capital contributed EUR 900 million, mainly due to strict inventory management, while changes to provisions had a negative impact of EUR 1.3 billion, primarily from the utilization of warranty provisions. Automotive net financial assets were reported at over EUR 44 billion at year-end.
In Financial Services, BMW reported nearly 1.73 million new financing and leasing contracts, up almost 2% year over year, and said new business volume reached an all-time high of EUR 65.8 billion (up 2%), despite negative currency effects. Mertl said the moderate earnings decline versus 2024 was driven by lower income from resale of end-of-lease vehicles and tax payments tied to changed assessments of operating taxes from prior years, while the credit loss ratio of 0.28% was within expectations.
On shareholder returns, Mertl said the Board of Management and Supervisory Board will propose a total dividend payment of EUR 2.6 billion, a payout ratio of 36.6%. The proposed dividend was EUR 4.40 per ordinary share and EUR 4.42 per preferred share. BMW also completed its second share buyback program in early 2025 and began a third program after the AGM in May; together, the payout from the two programs amounted to EUR 1.25 billion in 2025. The third program runs until April 2027, with the ongoing second tranche described as EUR 625 million for ordinary shares, to be completed by August 31, 2026 at the latest.
2026 outlook and Neue Klasse rollout
Looking ahead, Mertl said BMW sees some growth potential in Europe and the U.S., while in China it has taken steps to stabilize transaction prices. Based on recent averages, he said China sales could reach last year’s level, leading the company to forecast global deliveries of BMW, MINI, and Rolls-Royce vehicles at the prior-year level. BMW also expects the fully electric vehicle share to remain at the same level as 2025 due to model cycle effects and shifting regulatory and market dynamics.
For 2026 profitability, BMW expects an automotive EBIT margin of 4% to 6% and automotive ROCE of 6% to 10%. Mertl said tariff pressure is expected to be about 1.25 percentage points on the automotive EBIT margin in 2026, compared to 1.5 percentage points in 2025. He added that depreciation and amortization will increase materially due to prior Neue Klasse investments, with additional P&L burden also expected from a lower capitalization ratio in the “30% area.” The company expects group EBT to be “moderately lower” than 2025, while forecasting automotive free cash flow over EUR 4.5 billion at year-end.
Strategically, Zipse said the Neue Klasse rollout began with the BMW iX3, which has ramped up at the Debrecen plant in Hungary. He said demand for the iX3 is “significantly exceeding” expectations, with strong orders from both private and fleet customers, including new-to-BMW buyers, and order books extending well into the year. BMW said it is increasing capacity in line with demand using flexibility in its production and supplier network.
Zipse also said BMW will unveil the BMW i3, described as the first variant of the next-generation BMW 3 Series, and plans to introduce a China-specific iX3 at Auto China in Beijing. He said BMW is preparing production across multiple sites, including starting i3 production in Munich in the second half of the year, launching high-voltage battery production in Irlbach-Straßkirchen in the second half of the year, and preparing plants in Shenyang and Spartanburg for Neue Klasse technologies. Zipse added that between now and 2027, BMW plans to bring more than 40 new or updated models to market, and said the next-generation X5 will be offered with five drivetrain variants, including hydrogen from 2028.
About Bayerische Motoren Werke Aktiengesellschaft (ETR:BMW)
Bayerische Motoren Werke Aktiengesellschaft, together with its subsidiaries, engages in the development, manufacture, and sale of automobiles and motorcycles, and spare parts and accessories worldwide. It operates through Automotive, Motorcycles, and Financial Services segments. The Automotive segment engages in the development, manufacture, assembling, and sale of automobiles, spare parts, accessories, and mobility services under the BMW, MINI, and Rolls-Royce brands. The Motorcycles segment develops, manufactures, assembles, and sells motorcycles and scooters under the BMW Motorrad brand, as well as spare parts and accessories.
