BMW execs face tough questions: Worsening sales in China

MUNICH: BMW AG executives will likely face tough questions this week about worsening sales in China and the impact of global trade tensions when they sit down with investors and analysts in Munich.

The two-day meeting, which starts Tuesday, comes a week after the German automaker reported a 14% second-quarter sales drop in China, where local manufacturers led by BYD Co. dominate on electric vehicles.

The announcement followed BMW's worst first-quarter sales performance in the country since 2020.

At the event, Chief Executive Officer Oliver Zipse is expected to focus on the upcoming release of BMW's new electric platform, the Neue Klasse, which is meant to become a cornerstone of the business in the coming years.

The company bets the models - featuring BMW's latest technology - will continue the shift away from combustion vehicles, with production starting later this year.

"A lot is riding" on the event to "validate whether Neue Klasse does close the gap with Tesla and key Chinese competitors on software and powertrain," Jefferies analyst Philippe Houchois said in a note to clients.

BMW has a head start over its German rival Mercedes-Benz Group AG on EVs.

Sales of BMW's battery-powered cars rose 16% in the first half, while Mercedes' EV deliveries slumped 19% in the same period.

Meanwhile, US President Donald Trump's weekend threat of 30% tariffs on imports from the EU and Mexico complicate BMW's outlook.

Before the announcement, which could raise the levy on car imports up from its current 25%, Zipse said he was optimistic tariff discussions would produce a "manageable outcome."

Despite the competitive and trade hurdles, BMW's global vehicle sales remained roughly stable in the second quarter, inching up 0.4%.

Robust demand for its Mini cars and hybrid models offset waning sales at the main BMW brand and the weakness in China.