Auto industry: profit at BMW sags – the very fat years are over

Now also BMW: The Munich car manufacturer has to accept a drop in profits for the past 2024 financial year. After taxes, the group earned 7.7 billion euros. That sounds a lot, but is 37 percent less than in the previous year and the second severe decline. In addition to weakening sales in China, the Munichers also suffered from problems with brakes related to the supplier Continental.

Sales also had to accept a clear dampers. 142 billion euros are a minus of 8.4 percent. After all, BMW expects increasing demand for the current year. Despite the “challenging” situation and the recently imposed inches imposed by the USA, the input tax result should land again at the level of 2024. BMW does not give a forecast for profit after taxes.

BMW is not alone with its slump in profits. The other two large German car companies, Volkswagen and Mercedes-Benz, have also reported similar crashes. At VW, it had gone 31 percent to 12.4 billion euros, at Mercedes by 28 percent to EUR 10.4 billion. Among other things, they complain about the difficult environment in China.

So are the German car manufacturers deep in the crisis? This depends on the perspective from which you look at it: money or future.

In order to correctly assess the question of the financial situation, it is worth widening. The current results should not only be compared in the past few years, says industry expert Frank Schwope, the automotive industry at the University of Applied Sciences in Mittelstand in Cologne and Hanover.

“At the moment we see normalization after a special situation with previously unknown profits. After the first Corona slump in 2020, there was hardly any discounts and a shift towards more expensive models in the following years – especially due to the chip or vehicle deficiency,” he explains. “This brought the manufacturers such as VW, Mercedes or BMW exorbitantly high margins, which are normally not available.”

This can also be understood on the BMW numbers: the previous record profit of 18.6 billion euros dated 2022. 2021 and 2023 there were more than 12 billion. Compared to this, the current result looks puny. But before these three special years changed the scale, the old record win from 2017 was 8.7 billion. Even if you take into account inflation, the current result of 7.7 billion does not look quite as bad in comparison.

This is how it also sees Schwope, but this refers to all three large corporations: “The current numbers are not bad. They only look bad compared to the special years,” he says. He doesn’t want to speak of crisis. “Of course it always depends on how to define crisis, but I rather think of times when, for example, VW has slipped into the red numbers.” In any case, the current figures are no reason to whine.

Industry is concerned about the future

However, this is no reason for the all -clear: Because times are challenging and the manufacturers have justified “concern about an impending crisis and do well to adapt the structures at an early stage,” says Schwope.

VW is already there: Among other things, almost every fourth job is to be lost in Germany by 2030. Mercedes also wants to reduce the costs of several billion euros in the coming years and has announced a severance payment program. And the list can be continued: At Porsche there are 1900 jobs on the strike list at Ford in Germany 2900. The suppliers also be deleted or dismantled: Bosch, Schaeffler, ZF, Continental, Thyssenkrupp – to name just a few names.

These worries also express themselves in the mood in the industry. And it is bad – especially if you also take a look at the suppliers. The business climate index for the auto industry, which is raised by the Munich IFO Institute, is currently almost 35 points deep in the minus.

After all: BMW can escape a bit: the permanent staff recently increased slightly.

The global auto industry also sees the management consultancy Alixpartners particularly affected by disruption. The biggest problems are disturbed supply chains, increasing material costs and growing uncertainties in international trade relationships. Last but not least, the latter are threatened by the customs plans of US President Donald Trump.

In addition, there are the relatively high costs for personnel and energy in the home country. And then there is China: On the one hand, the world’s largest market that had long ensured rapid growth and high profits is much more difficult. On the other hand, the competition from there is getting stronger – especially in the increasingly important area of ​​electromobility.

The latter is also a problem area in itself. The pure electricity still only make up relatively small shares in the sales of the corporations and the parallel work with combustion, hybrids and pure streamers makes a lot more complicated. And the sales of the electric cars are not quite progressing for most manufacturers. BMW is much better here than the other German manufacturers and was able to significantly increase its sales last year. But sold 427,000 electric vehicles are not even a fifth of their own overall production.

Nevertheless, BMW describes it as the most important growth driver. The new class should bring additional thrust here. Their first series vehicle is scheduled to go into production at the end of 2025. BMW also took a lot of money for this last year. The group spent a total of 18 billion euros on research and development.