BMW affirms margins outlook: How the company is managing tariffs

Yahoo

17 hours ago

BMW (BMW.DE) is holding up better than its rivals despite new US tariffs, thanks in part to US SUV production and pricing changes on Mexico-built models.
Yahoo Finance Senior Reporter Pras Subramanian joins Market Catalysts to explain how the automaker is navigating tariff pressure.
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Let's stick with this focus on tariffs because shares of BMW rising nearly 4% after a call reaffirming its auto margins for the second quarter and full year. It's the rare piece of good news from German automakers. They have been warning they'll be taking a hit from US tariffs. Yahoo Finance senior reporter Pras Subramanian is here with the details. So how did BMW manage to navigate this better?
I'm a little surprised they're able to do that. I mean, they they talked about how they would they would take a tariff hit and they were price protecting some US models through May. Uh it seems they they've stopped doing that. They've raised prices on some cars that are built in Mexico. So that might be how they're maintaining some of their margins. They're leaning on their European operations and China bit weaker. So they're going to try to defray some of that with with that. But, um, you know, expectations wise, you know, I think they might be expecting a trade deal. I think they think there's a trade deal happening potentially in July with that 10% deal. Maybe they kind of see that happening. more uh, more positive about that than other automakers. I think that's why they're able to sort of maintain that that profit margin expectation. Uh, plus they also a big part of is they build a lot of their SUVs in America and they export them to the rest of the world. So that's no tariffs there. So maybe that's part of why they're able to see that they can maintain some of their profitability in light of tariffs.
And so, what about the rest? Because obviously, if BMW is the outlier, that means the other German automakers, and I'm guessing European automakers more broadly are are struggling with this?
Yeah, yeah. Uh, Mercedes and Porsche are struggling here. Mercedes, even though they have they have operations in Alabama, uh they saw sales dip in the US. They price protected all 2025 models through the If you order one car today, they'll still price protect you. So they're absorbing that cost. They're seeing that bring down some of their sales there in the US. Porsche on the other hand actually saw um, saw sales rise in the US, but they they attributed to the fact they have all this pre-tariff inventory they were selling off. Um they were eating the costs and they're they're probably not going to keep doing that. They make all their vehicles in Germany and some in Slovenia. So they're really tied to the tariff situation. They're they're probably hoping that they're going to see this deal come through. So right now they're they're really the ones that are sort of struggling the most in terms of tariff exposure.