The bosses of Europe’s biggest carmakers will be sweating over what a shock election victory for Donald Trump could mean for their already troubled sector. But for BMW, at least, it could be a good opportunity for more trade wars.
BMW CEO Oliver Zipse sought to play down concerns about what a Trump presidency could mean for the automaker by saying his administration would unleash sweeping tariffs on European imports.
Trump hit out at European producers in his comments last week election on November 5, to indicate that new import taxes would be imposed.
“They don’t take our cars. They do not take the products of our farm. They sell millions and millions of cars in the United States. No, no, no, they will have to pay a big price.”
Goldman Sachs expects the Trump administration to impose tariffs on $80 billion worth of EU auto-related imports, which are responsible for about 0.9% of EU exports. The bank has identified Volvo cars as facing the biggest headwinds to earnings from the move, followed by Mercedes, Porsche, BMW and Volkswagen.
BMW shares fell 6.6% between the close on Tuesday and the close on Wednesday, due to Trump’s election and disappointing earnings. Shares rebounded 2.7% this morning. BMW’s German rivals Volkswagen, Mercedes-Benz and Porsche also saw their ratings decline on Wednesday.
BMW tariff “advantage”
Speaking to reporters following the company’s third-quarter earnings report, Zips said BMW “prefers to have an advantage” over other automakers because it has “a big footprint in the U.S. for the United States.”
“At this point, we shouldn’t be too nervous about what might happen,” Zips said.
“It can really provide us with a benefit.”
BMW makes its X5, X6 and X7 models in the US, while the X3 has just started production there. US shipments fell 92% in the third quarter of 2024 compared to the same period in 2023.
The company produced 410,000 cars from its Spartanburg, South Carolina plant in 2023, more than half of which were exported to 120 countries. Zips suggested that BMW is well positioned to target those models to US customers to meet US demand.
“There is a natural hedge against possible tariffs,” Zips said.
The prospect of a more frosty trade environment between the US and Europe is likely to set back BMW’s struggles in China.
BMW’s pre-tax profits fell by 79.4% in the third quarter of 2024 compared to the same period last year. cut off his driving in September The automaker cited ongoing challenges with the massive recall caused by a faulty brake system.
However, it is in China that more existential threats linger.
BMW’s deliveries in China fell 30% compared to the third quarter of 2023. The automaker cited the “ongoing crisis in the real estate sector and the overall decline in domestic demand” as the main factors behind its decline in the country, as well as the increase. competition from domestic automakers and other foreign players.
While he was relatively tight-lipped about the prospect of new tariffs coming from the US, Zipse doubled down on his opposition to the EU’s tariffs on Chinese electric vehicles, which will hit some imports with a 48% tariff.
“Our statement continues that these tariffs will not see any winners,” Zips said on the earnings call, arguing that the tariffs could lead to a trade war.
