BMW reported a 3% decline in full-year net profit for 2025, highlighting growing pressure on the automaker’s margins from global tariffs. Despite the headwinds, the German premium car manufacturer maintained a stable earnings margin for the group and proposed keeping its dividend payout ratio unchanged.
The company posted net profit of €7.45 billion for the year. Earnings before tax dropped 6.7% to €10.24 billion from €10.97 billion in the previous year. However, BMW managed to keep its EBT margin steady at 7.7%, according to the Munich-based automaker’s results released on Thursday.
Revenue and automotive segment performance
BMW’s total revenue declined 6.3% to €133.45 billion compared with €142.38 billion in 2024. When adjusted for currency movements, the decline was more moderate at 3.9%.
The biggest impact was felt in the automotive division, which saw profitability fall significantly. Segment EBIT dropped 20.7% to €6.26 billion, pushing the EBIT margin down to 5.3% from 6.3% the year before. This placed the margin near the lower end of BMW’s target range of 5–7%.
The company said tariffs alone reduced the automotive margin by around 1.5 percentage points during 2025.
Automotive free cash flow also declined sharply, falling 33% to €3.24 billion from €4.85 billion in the previous year. The decline was mainly driven by lower operating cash inflows, although reduced capital spending helped partially offset the impact.
Cost reductions and spending cuts
BMW’s finance chief Walter Mertl said the company’s strict cost control measures helped support profitability during the year.
According to Mertl, the company reduced expenses by €2.5 billion in 2025 through active cost management initiatives. BMW plans to continue lowering costs throughout the current year as part of its broader efficiency strategy.
Research and development spending fell 8.4% to €8.32 billion, reducing the R&D ratio to 6.2% from 6.4%. Capital expenditure dropped 20.1% to €7.24 billion, while the capex ratio declined to 5.4%.
Sales and administrative costs also decreased by 6.1% to €10.61 billion.
Global vehicle sales and EV growth
BMW’s global vehicle deliveries increased slightly by 0.5% to 2.46 million units.
Demand declined sharply in China, where sales fell 12.5%. However, growth in Europe and the Americas helped offset the decline. Sales in Europe rose 7.3%, while deliveries in the Americas increased 5.6%.
Among the company’s brands, MINI recorded the strongest growth, with sales rising 17.7% to 288,278 units. Deliveries of the core BMW brand fell 1.4% to 2.17 million vehicles, while Rolls-Royce deliveries slipped slightly by 0.8% to 5,664 units.
Battery-electric vehicle sales increased 3.6% to 442,056 units, accounting for 17.9% of total group sales. When including plug-in hybrids, total electrified vehicle deliveries reached 642,071 units, representing roughly one in four vehicles sold by the company.
Financial services and shareholder returns
BMW’s financial services division reported profit before tax of €2.40 billion, down 5.4% from €2.54 billion a year earlier. The decline was attributed to lower income from lease-return sales and a tax arrears payment made in the previous year.
However, new business volume increased 2% to €65.82 billion. The penetration rate also improved to 46.6%, up from 42.6%.
The board proposed a dividend of €4.40 per common share and €4.42 per preferred share, slightly higher than the previous year’s payout. This maintains a dividend payout ratio of 36.6%, which is near the upper end of the company’s 30–40% target range.
BMW also announced plans to convert all preferred shares into common stock on a one-to-one basis without additional payment. The proposal will be presented to preferred shareholders during the annual general meeting scheduled for May 13.
In addition, the automaker completed €750 million of its €2 billion share buyback program authorized in 2025. The program is expected to continue until April 2027.
Outlook for 2026
Looking ahead, BMW expects operating conditions to become more challenging. The company warned that tariffs alone could reduce the automotive EBIT margin by an additional 1.25 percentage points in 2026.
Other factors weighing on profitability include currency headwinds, higher raw material costs, rising depreciation, a declining used-car market, and pricing pressure in China, particularly during the first half of the year.
As a result, BMW expects its automotive EBIT margin to fall within a range of 4–6%, while group earnings before tax are projected to decline moderately.
BMW CEO Oliver Zipse said the company intends to stay focused on its long-term strategy despite the difficult market environment.
The automaker forecasts automotive free cash flow to exceed €4.5 billion in 2026, while the financial services division is expected to deliver a return on equity between 13% and 16%.
