**Germany**: BMW’s CEO warns of a one billion euro profit loss in 2023, following tariffs from the US and EU, as declining revenues reflect broader challenges within the global auto industry, exacerbated by a shift towards electric vehicles and ongoing trade tensions.
BMW has announced that its profits are set to be adversely affected by at least one billion euros in 2023 due to recent tariffs imposed by the United States and the European Union, amid a precarious climate in the global auto industry. The warning comes as the German automotive manufacturer reveals a decline in annual revenues, with a reported drop of 8.4 per cent, resulting in total revenues of 142.4 billion euros.
The announcement was made by CEO Oliver Zipse, who described the billion-euro estimate as “conservative” and expressed hopes that the tariffs would remain in effect only until 2025. BMW’s manufacturing footprint includes a significant facility in Spartanburg, South Carolina, alongside operations in Mexico, where models such as the 2 Series, 3 Series, and M2 are produced. This situation places BMW directly within the scope of tariff audits, especially as recent trade agreements have oscillated between the U.S., Canada, and Mexico. Despite the U.S. temporarily suspending tariffs on certain Mexican imports, many BMW vehicles do not meet local content requirements, making them susceptible to potential new duties.
Approximately half of all BMW vehicles manufactured in the United States are exported, predominantly to Germany, China, Canada, and the United Kingdom. This reliance on global markets has rendered the company particularly vulnerable to regulatory changes and retaliatory measures that could arise from ongoing trade tensions.
Simultaneously, Daimler Truck, another German automotive giant, has echoed similar concerns regarding the impact of political and economic uncertainty on its performance, announcing a cost of 1.1 billion euros in response to these pressures.
The challenges facing BMW and the wider auto sector occur against the backdrop of a significant transition from traditional combustion engines to electric vehicles. The industry has already shed approximately 54,000 jobs in 2022, and there are predictions of an unstable landscape continuing through 2025.
Eric Lombard, the Minister of Finance and Economy, has openly condemned the tariffs imposed by the United States, labelling them as “foolish” and calling for dialogue to ease tensions. Christine Lagarde, President of the European Central Bank, described the trade dispute as a “great call for waking” that could potentially strengthen European unity.
Despite calls for collaboration, hardline rhetoric continues from some U.S. officials. When questioned about the possibility of extending tariffs to vehicles from all nations, presidential ally Howard Lottenic responded, “This will be fair, right?”
Meanwhile, Joachim Najil, President of the Bundesbank in Germany, characterised the American president’s strategy as a “horror show” that could potentially drive Germany into recession. His French counterpart, François Fillon de Galhao, warned of broader implications, stating, “It is first a tragedy of the American economy.”
Source: Noah Wire Services
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