Q1 2025 Bayerische Motoren Werke AG Earnings Call - Q&A
Yes.
[music].
Thanks to our quarterly earnings call I'll watch the old saying.
Ill, let see if old bites of metal alloys are back in the room with me.
I am going to be open shortly for your questions. The operator will give you some technical instruction.
Ladies and gentlemen, we will now begin our Q&A session.
Now the question, you're asking you P GP pump function of automobiles and screen or if you have dialed in please press star one to enter.
The key.
Husky: What's your name Husky announce you can ask a question.
Husky: If you want to withdraw your question. Please know Johan do you think the rain pump function and Oh via telephone call nine.
Husky: Thank you and can you stay tuned for all those questions.
Speaker Change: Our first question comes from Patrick Ho Hum E G.
Speaker Change: She's on mute your line.
Patrick: Hi, Patrick.
Speaker Change: Please.
Speaker Change: Hello.
Speaker Change: Yes.
Speaker Change: Yes, sorry, I wasn't able to on mute until now good morning, everybody. Thanks for taking my question.
Speaker Change: If I can start Oliver relating.
Speaker Change: Through your view on the tariff relaxation that youre talking about for the second half of the year.
Speaker Change: Hmm.
Speaker Change: No U S. OEM talked about this and it seems like you know based on the commentary from them from the media call that you'd take your optimism from the fact that you're such a big exporter out of the U S. I just want to understand if that's the right way to read it that's where your optimism is coming from and.
Speaker Change: Could you just give a bit more color.
Speaker Change: <unk>.
Speaker Change: Where your confidence comes from is it just from state level conversations with your your local governor or is that.
Speaker Change: Optimism coming from conversations you had with the administration in Washington, any any more color you can give would be greatly appreciate it and my second question relates to China I'm not sure if you're for you Oliver I'll have Walter I think you're still guiding for flat or flattish volume in China. This year, but the year to date trend is way worse than that.
Speaker Change: I understand that later in the year. There was this base effect from the braking system recall, but in light of also what your competitors are saying about China that seems out wildly optimistic assumption to take for China.
As far as the volumes are concerned so I'm just curious to.
Speaker Change: Get a bit more color also on that topic. Thank you.
Speaker Change: Okay. Thank you very much Patrick we start with Oliver and then Boyd.
Speaker Change: Yes.
Speaker Change: Yes.
Speaker Change: Good morning.
Speaker Change: Talking about the terrorists.
Speaker Change: Is your base assumption or our base assumption that'd be temporary tariffs.
Speaker Change: Or permanent tariffs.
Speaker Change: I think it's albeit with what is happening currently in the United States.
Speaker Change: Cannot have the assumption.
These terrorists are permanent there's no indication that they will be permanent.
Speaker Change: They are currently in force that's true, but if currently there are a lot of negotiations behind the scenes.
Speaker Change: That leads to the base assumption that theyre, rather temporary indeed.
Speaker Change: Independent what the outcome will be so there's one base assumption we have.
Speaker Change: It's much more likely that they are temporary but the 25% tariffs.
Speaker Change: On the blocks, where everybody in the industry has.
Speaker Change: Consequences and.
Speaker Change: When you make an assessment.
Speaker Change: These consequences good for the United States or not and then you make your own assumption what is the likely outcome and our likely outcome there.
Speaker Change: We'll be terrorists even after the first of July of course, there will be tariffs that will be different tariffs than last year and the only question is how can be compensated.
Speaker Change: And there are three ways compensation for making clear that you are a large exposure.
Speaker Change: Thursday enforced that volume will go down and nobody.
Speaker Change: Will will will.
Speaker Change: We'd like that scenario in the second.
Speaker Change: Are you.
Speaker Change: Heavily invested in the country we are.
Speaker Change: We're heavily invested even even though that we continue to be invest now into the electric drivetrain. We set the figures in my speech, one 7 billion only for the electric drivetrain, what cars, who come to the market in 2026 and 2026 is around the corner. So it's in the process of being and missed it.
Speaker Change: And if you take all that together being the launch explorer.
Speaker Change: Having a growth scenario in the United States, where none of the assumption that this is a shrinking market for us.
Speaker Change: Because we know our new products coming next year, we know our current.
Speaker Change: Product portfolio, it's technology open we thrive there with <unk>, but also with <unk> at the same time and that is not a contradiction. So if you look at your own business.
Speaker Change: Pace of growth of technological openness of export the likelihood.
Speaker Change: And that leads to all the assumption that we will have some adaptation of errors.
Speaker Change: For us at least.
Speaker Change: It's the right assumption.
Speaker Change: Patrick we know supply chains.
Speaker Change: We know what is happening exactly what happened with last week's tariffs relief of 375% on all imports.
Speaker Change: We know exactly the effects.
Speaker Change: And if you add all that up that leads to the assumption that we will have some form of relief there.
Speaker Change: No.
Speaker Change: And do you basically assume that Theres, some net inc.
Speaker Change: <unk> exports is that what do you expect to be.
Speaker Change: Be enforced after July.
Speaker Change: I don't want to I don't want to speculate.
Speaker Change: 2007.
Speaker Change: I don't want to speculate at this point in time, but I think all I can say, it's a strong argument and it's a very strong argument.
Speaker Change: To take that into account that's all we can say now what the outcome is and whether that will be something.
Speaker Change: We don't know that I really don't want to speculate and neither I want to hope. This is not a good but we have a very very strong argument, that's all I'm, saying okay.
Speaker Change: The other part of it.
Speaker Change: So.
Speaker Change: Knocking on on that I mean, it's also the.
Speaker Change: No stacking any mortgages, although thing into the comp right. So that was especially between Mexico and the U S. A burden.
Speaker Change: Disappeared now from May so, we shouldnt forget that.
Speaker Change: And the footprint footprints IV elaborated before and I'm happy to do that further but coming to your China question.
Speaker Change: Flattish assumption is still there and why is it we had a discussion last year.
Speaker Change: And we shouldn't forget the weak Q3, 'twenty four which we catch up first of all and we have been fully aware and planned and expected that Q1 will be double digit down year on year. That's the reason why we elaborated in March.
Speaker Change: Ron on the second half year run rates into Q1, and then Q3 effects go away. So it's rather than the Q4 run rates on top of that we also had a discussion about our dealer network.
Speaker Change: The biggest tech now in Q1, we saw that already.
Speaker Change: Some of those we mentioned upon beforehand and also in Q2 more to be sorted. So we are dealing with that that's the reason why we discussed about the dealer network will be more stable and profitable profitable in the second half here, which is all helping of course on the sales side too.
Speaker Change: So that's the reason.
Speaker Change: Not to forget finally, the X three there.
Speaker Change: Run out of the previous ex free and now with the New X three since mid February just in the showrooms, we have a good run rate on the new extreme it's ramping up so we assume that one is also elevating our run rate in China Patsy.
Speaker Change: This in combination ends up in the math of metrics.
Speaker Change: Thank you all heard Brian Boitano, Thank you very much Patrick.
Speaker Change: Next question please.
Speaker Change: Our next question comes from Stephen Reitman.
Keith: Keith Your line by pressing star and all.
Speaker Change: Ask your question.
Speaker Change: Hello, Steven.
Speaker Change: Yes.
Speaker Change: And it's been a delay.
Speaker Change: With morning, Yeah.
Speaker Change: Yes. Good morning go ahead I have two questions. Please go ahead.
Speaker Change: One that you mentioned in your commentary that you face a low three digit million impact from the punitive tariffs to the EU is pushing on vehicles coming from electric vehicles coming from China.
Speaker Change: Could you comment on has there been any movements. There was talk about some kind of deal between the EU and somehow compromised so I'd be interested in what youre seeing on that.
Speaker Change: And how that would impact many obviously.
Speaker Change: And secondly, you did allude to some changes in the China and the Chinese data network could you be a bit more specific about what's been happening in terms of reducing that footprint. Thank you very much.
Oliver: Until we start with Oliver and then Murrieta Alibaba.
Stephen: Yes Stephen.
Stephen: The total import duty for BMW from BBA will be 31%, that's 10%, which are which are customers.
Stephen: And in the European Union, plus the 27000.
Stephen: 27%.
Stephen: What's the current status.
Stephen: We we always said this is this is not only highly unfair trade policy. This also hinders too.
Stephen: To bring affordable products in the electric arena to the European customers.
Stephen: And.
Stephen: Sure.
Stephen: That is why we filed the lawsuit with the European Court to uphold our legal position.
Stephen: Nevertheless, we would still prefer to reach a negotiated political agreement and as we speak we are trying to do so.
Stephen: Also with the argument you cannot complain about an import duty of 25% in the United States and at the same time to impose a tariff of more than 30% to USD two two.
Stephen: You're paying player our key argument here.
Stephen: In Europe, specifically BMW, we are not European players, we are global players, we export to the to China.
Stephen: We have a lot of local for local activities in China, but we also export. So we are always affected whatever you do global companies are always affected and that's why we described for freight rates and robust trade relationships and especially this 30% duty on imports is.
Stephen: Is a very very strong.
Stephen: Mitch take the European U.
Stephen: Need us to support global players and and again in our industry. They are not very many local players, but BMW is one of them.
Speaker Change: Thank you very much Oliver the second part of the question was about China, the dealer network footprint with Voyager, Yes, Hello, Steven.
Speaker Change: As we mentioned in 'twenty form be organized already 24 dealer points reduced the network already last year and in Q1. We also had a low double digit number already transferred all closed that's already in the middle of it and the same is expected in Q2, so again, a low double digit number of dealers.
Speaker Change: To be either transfer or closed.
Speaker Change: The good thing is that we are finding new investors. So we will see that BMW is very attractive to invest into and make business with and that's the good thing. That's the reason why we can organize the dealer network right sizing so fast and that's why we assume that from the second half.
Speaker Change: <unk>, we are in a better position than we are just digging through the first half year.
Speaker Change: That's the status.
And your question about how many dealers do USD.
Speaker Change: Or did you have at the end of 2024 in China, BMW and mini if you can separate them.
Speaker Change: So far still over 600.
Speaker Change: That's the number we have to come on that.
Speaker Change: Yeah.
Speaker Change: BMW and many brands.
Speaker Change: Okay.
Speaker Change: That's correct, it's combined it's combined <unk>.
Speaker Change: Do know that BMW model and many is on direct sales model in China.
Steven: Goodness, but thank you very much Steven.
Steven: Thank you very much Steve them.
Speaker Change: The next question please.
Speaker Change: Our next question comes from Jose have human data.
Amit: Amit your line.
Speaker Change: Thank you very much.
Speaker Change: Good morning couple of questions. Please Oliver can you. Please comment on the topic of your startup. If you are taking some measures to increase prices in the U S.
Speaker Change: And any.
Speaker Change: Mr. <unk>, you are implementing with suppliers to increase the local content in the region.
Speaker Change: Also with regards to China.
Speaker Change: I would like to understand a little bit better if you are taking down capacity.
Speaker Change: <unk> seen in China, just maybe so.
Speaker Change: Lower level of sales, particularly in China, or you haven't done any major capacity.
Speaker Change: Just been stacked.
Speaker Change: And then finally, Walter can you comment a bit on the on the margin progression. Ultimately Q2 versus Q1 are we still in the margin range guidance, you're asking for the year or steady Q2 a.
Speaker Change: A bit of an exceptional and we should be thinking about our second quarter margin slightly below the margin range. Thank you.
Speaker Change: Okay.
Oliver: Thank you very much Steve we start with Oliver about the.
Speaker Change: Again, the U S tariffs and then China in the margin with Volta Oliver Please.
Oliver: Yes.
Oliver: Let's see about the tariffs again.
Oliver: Let's look at our very very specific situations with BMW in the United States.
Oliver: Let's begin with our footprint over the past 30 years, nearly 7 billion Bmw's had been assumed.
Oliver: In the United States.
Oliver: And just last year in 2024, we assembled nearly 400000 units and Spartanburg.
Oliver: Now the peculiar artists in 'twenty to 'twenty four the plant exposure on 225 million BMW vehicles with an export value of more than $10 billion, making it once again the largest automotive export above early in the United States.
Oliver: And since overall 2014, the plant in South Carolina is exported over $2 7 billion BMW vehicles, representing around two thirds of total production with an export value of more than $100 billion.
Oliver: Now about the localization we've invested roughly $15 billion already know our Spartanburg plant and we are now investing another $1 7 billion to enable the production of fully electric vehicles in the United States and alone 1 billion goes into our best production in spot book itself 700 million for a high voltage battery.
Oliver: Assembly in wood.
Oliver: And by the way that that investment was already announced in 2022.
And I think in our negotiations about localization. It plays a role that our ongoing activities and salads carondelet directly and indirectly support nearly 43000 jobs and over $3 billion in wages and salaries in the state with an with an increasing notion.
Oliver: And the overall impact in South Carolina with more than $26 billion.
Oliver: <unk> kind of place the ROA in our arguments.
Oliver: I would like to emphasize again the more we grow in the United States. The more we will also localized and there is a direct link about localizing exporting and growing in the market. That's one that one set of parameters, we're trying to do to bring into the negotiations.
Oliver: And I think we have positive arguments for.
Oliver: For having some form of.
Netting of important exports in the United States.
Oliver: Thank you very much Oliver envoy Tom.
Jose: Hello Jose.
Jose: So the Chinese production and we always have to see in different aspects between China and non China, because the cost structure on a totally different especially if the depreciation side also labor costs.
Jose: You can be assured that the cost structure in order and targets.
Jose: To contribute also to the group contribution and to improve profitability.
Jose: That is all set.
Jose: I'm not worried about at this point.
Jose: Margin progression.
Jose: Do we know that we are not giving quarterly guidance, but full year guidance and the full year guidance is between five and seven of course risen slide extra burden on purpose. The messages we have given on March 14th all the rest depends of course on the development on everything from July onwards.
Jose: But as we mentioned we will be in the guidance that's full year stage.
Jose: Yeah.
Jose: Thank you very much for C. Next question. Please.
Speaker Change: Our next question comes from Rick Olson Deutsche Bank. Please on mute your line.
Rick Olson: Yeah. Good morning can you hear me.
Speaker Change: Yes, we can hear you excellent. That's go ahead your Max that's awesome, that's always a slight delay here until we.
Getting rid of your mute I have two questions. Please I think its fair to say that most discussed element of your statements today is probably the tariff point in your guidance.
Speaker Change: Perhaps.
Speaker Change: Most likely Walter can you help us clarify this completely a the guide includes all tariffs that we know of as of today B you don't expect all of them to go away by the first of July, but some and then at some point with an H two.
Speaker Change: This does include some assumptions on mitigation and secondly, I'd like to try that once you just responded to Jose slightly differently again.
Speaker Change: Even assuming some of this goes away in nature, So which still means there's a pretty sizable effect. In Q2 are you willing to at least quantify the Q2 effect to help us.
Speaker Change: With our calculations for the full year and is it right to assume that the Q2 margin will be below the full year range. Given this effect. Thank you.
Speaker Change: Good thank you very much Tim.
Hello, Tim.
Speaker Change: Well as I tried to mention already in the speech beforehand.
Speaker Change: All we have taken all tariffs in place as of May five.
Speaker Change: First of all and the difference to our March guidance.
Speaker Change: Incorporates all tariffs on U S imports of CPU and non U S MCA components and an additional 25%.
Speaker Change: Cornerstone of course is the lost executive order from last week, because that took away.
Speaker Change: The second approach plus opened up the eligibility of the 375% of the MSRP for the Spartanburg production volume and.
Speaker Change: And you can participate and of course, we assume based on all the negotiations for here maybe in different levels are also in <unk>.
Speaker Change: Four we assumed from Chennai relief of the tariff burden, it's not saying that the tariff is disappearing as tariff is still there and which form.
Speaker Change: The burden in our P&L, we assume will be lower than currently.
Speaker Change: Post so that is the key.
Speaker Change: It will be a reduced cost.
Speaker Change: And its about all tariffs around the world and of course, we focus, especially on all these changes.
Speaker Change: From the last two months.
Speaker Change: Ever happens and take all mitigation aspects into consideration utilizing all of our products network. So our production network.
Speaker Change: Utilizing everything possible.
Speaker Change: Ends up with these total assumption and all this premise et cetera.
Speaker Change: For the full year, we are still in the guidance between 5% and 7% and not to forget.
Speaker Change: Also.
Speaker Change: Underpinned.
Speaker Change: In the previous year's level of <unk>.
Speaker Change: Profit before tax I think these in combination that give you enough information and quarterly numbers I'm not sharing at this point.
Speaker Change: My Q2 numbers with you end of July.
Speaker Change: Hope you understand that manifest.
Speaker Change: Thank you very much Tim Arco's next question. Please.
Chris: Our next question comes from Chris you're right.
Amit: Amit your line.
Amit: Hello Felipe Yep.
Amit: Calling you.
Amit: Thank you I Hope you hear me local Italy can you hear me.
Amit: Yes, that's great.
Amit: Okay Alright.
Amit: Right.
My first question is how can you be so precise about July or is it just July is the first month of the third quarter. It seems odd I completely understand your arguments about negotiation about offsetting import export et cetera why July.
Amit: And then I think you answered my next question, which is that you are eligible to 375% of revenue rebate.
Amit: Which is nice.
Speaker Change: But I thought you'd applied only for vehicles that were U S MCA compliant.
And I thought you were not.
Speaker Change: Potentially on the Evs, if you're able to source.
Speaker Change: More of the battery content in the U S.
Speaker Change: Then more generally.
Speaker Change: Seems to me that if U S. MCA compounds is critical as long as you import powertrain from Europe, you will not be compliant.
Speaker Change: And you already outsource more powertrain than most since the transmission company that is most of your competitors still make transmissions. So you already have some more flexibility I'm just wondering.
Speaker Change: Can you actually shift more content on the ice side to North America, where you are.
Speaker Change: Specifically by outsourcing more before you get to a more extreme option, which would be to relocate ice to the U S, which to some extent would make sense because one Europe wants to kill the combustion engine in Europe and the U S doesn't.
Speaker Change: So why don't you even consider shifting powertrain operations ice powertrain operations out of Europe into the U S. Thank you.
Oliver: Oliver please.
Oliver: And your first question about wide July it's not exactly to rely maybe as I said before.
Oliver: The assumption and everything we talk about our assumptions we make.
Oliver: But we make assumptions.
Oliver: Based on our assumptions, we make are broke notice one assumption.
Oliver: And I think it's the most important one of these permanent tariffs or temporary tariffs.
Oliver: And we are of the opinion that tariffs are enforced right now so we have to pay them.
Oliver: If they stay there will be serious disadvantages too.
Oliver: <unk>.
Oliver: Whole economic system of cars being produced and sold an exporter in the United States and I think there was a better model.
Oliver: So with our arguments we think at some point in time and you can make assumption is it June July or August.
Oliver: It's right in the middle.
Oliver: There will be some form of negotiated agreement the outcome.
Oliver: We don't know it would be speculation, but again as I said, we are very very strong arguments to grow in the United States, but that will only happen.
Oliver: If we find a way to overlap component tariffs.
Oliver: That means completed car tariffs and at the same time some form of <unk>.
Oliver: Considering that we are exporting cars, so it's not only one tariff.
Oliver: Is the sum of component tariffs, including the relevance of use MCA first part the second is import export of cars and then of course local footprint.
Oliver: I'll turn into investments and creating jobs. So it's not just about this one tariffs of 25% it's much more complicated.
Oliver: It would lead to far to go into every detail of our assumptions and our calculations right now, but the main three elements I just talked about play a part in that.
Oliver: And it's an assumption that in the next three months, let's target like that we will get brokers as we have done by the way.
Oliver: In the first round, which led to the 375% that was also a negotiated agreement don't forget that.
Oliver: Already gave us some relief there will never be.
Oliver: The perfect solution, where you do completely local for local.
Oliver: That you are fully U S. MCA combined and you are not at all exports from the United States. This will never be the case for BMW.
Oliver: That assumption that we are fully compliant with everything is not our assumption.
Oliver: It's all about mitigating negative effects will they ever be zero note there will never be complete zero, but I think they will be up.
Oliver: Up to the point, where they are negligible.
Oliver: So that's our stance here.
Speaker Change: Boy Tom.
Oliver: Hello Philip.
Speaker Change: Just always consider that this eligibility of 375% downwards is for parts and components imported and utilized.
Speaker Change: That will be June already these bonds, we directly import and of course, we are already in the discussions with our supplier network. We also assume that we're not just our direct imports first of all.
Speaker Change: And these numbers flying around since last week from different competitors.
You should always see the footprint and compare the footprint of those compounds with us and there are massive differences so to say and that means that our tariff impact compared to others is different and you should consider those wants to place. So it's not just about the stocking and the 375% benefit which we are.
Speaker Change: Benefiting from its also depressed footprint compared to other competitors would ever numbers.
Speaker Change: Taking around two is and you do know who is importing from that into the U S or from the U S to China, and we'll look on those numbers and you come to the conclusion.
Speaker Change: Thank you very much boy I think we have three more questions.
Speaker Change: Our next question comes from.
Horst Schneider: Our next question comes from Horst Schneider Bank of America.
Speaker Change: Your line.
Horst Schneider: Yes, good morning, and I Hope you can hear me.
Speaker Change: I have got a firsthand.
Horst Schneider: Vic.
Horst Schneider: That's great. Thank you.
Speaker Change: The first question again on tariffs you gave at the full year figures. This number on sensitivity if they're also terrorist erased.
Horst Schneider: Between.
Horst Schneider: Europe and U S.
Horst Schneider: Is there a sensitivity now still in place or has anything about the sensitivity to change because they were retaliation measures.
Horst Schneider: And something happened in between on top that's bad. So maybe you can update on disincentive activity guidance again and the other question that I have a small housekeeping related.
Horst Schneider: Also with regard to Q1, we.
Horst Schneider: We see in your statements that you decreased provisions. So maybe you can tell us why.
Horst Schneider: R&D capitalization went slightly up.
Horst Schneider: And why is that the trends that we see also going forward because <unk>.
Horst Schneider: Finishing our development on the La cluster and the last one is the FX volatility has increased substantially we saw weakening of the renminbi. After dollar I know you are not sure.
Horst Schneider: Really a hedge but also financially hedged.
Horst Schneider: King has changed about the foreign exchange sensitivity for 2025. Thank you.
Speaker Change: Good. Thank you very much rose Multan.
Speaker Change: Hello, Us so I think with respect to them.
Speaker Change: Through the three step approach.
Speaker Change: Because everything changed in total different manners also all the mitigation to come to the street type approach anymore that easy because we mitigate across everything possible supply chain our own streams program network. So you can't utilize these three separate approach, which I mentioned.
Speaker Change: Mid of March sorry for that.
Speaker Change: But the basic is still there. It's just 10 four youre more or less the question what's in between and how much can mitigate based on the latest exec orders I think that is.
Speaker Change: I'd say with respect to decreased R&D that is a trend, which we mentioned in March that were coming down quarter by quarter compared to.
Speaker Change: 2024 wise steps because we have so we have all the R&D sets by the end of this year by end of 'twenty for the majority of it otherwise we wouldn't have a go live of Illinois exhausted and you do know that <unk> will be utilized in all cost to come not just the next one.
Speaker Change: Have to startup production end of November and debit chip.
Speaker Change: So of course tier one has still a higher a high level of costs.
Speaker Change: It's coming down is to start off with our key is coming closer that is already announced and.
Speaker Change: That's the full year range is coming down, but it's already the 200 million slower than previous years.
Speaker Change: With respect to.
Speaker Change: <unk>.
Speaker Change: So the provisions on a guarantee <unk> yeah.
Speaker Change: Half provisions not just to have them, but we have them for a reason. Unfortunately, we had some warranty topics, which we have to pay for and because this situation is coming into the right direction I won't have to refill. This warranty pockets currently but I used them, especially.
Speaker Change: Especially on the Ibs and the AGR topics you are well aware of for the last year. So that was a good progress and the payout ratio is coming step by step down. The peak was in Q4, especially because of Ibs divorce. The main topic in Q4 and step by step progress and this will come down.
Speaker Change: Of course.
Speaker Change: S X volatility there's no other.
Speaker Change: Different assumption that we had already in March.
Speaker Change: Total amount of FX and raw materials sites, we'll have mid three digits level year on year. So that's the full year number that's not just tier one or so.
Speaker Change: Thank you on the quarter, you sold 100 per node positive.
Speaker Change: Thank you everyone. My question on R&D was more related to the capitalization figure.
Speaker Change: If capitalization goes up from here or stay on yes that looks like it was in Q1 sorry.
Speaker Change: The capitalization level is higher in Q1, because you do know that the capitalization that base, it's based on all the projects.
Speaker Change: Quarter last year, we had a lower compensation level in Q4 will be about close to 50%. You'll remember now we are down under 40% and the full year number royalty is still in the range I mentioned last March.
Speaker Change: Sweden, 35% and 40% precisely mentioned even to Steven events. He embraces the question at the end of our press conference. It will be around the full year number of 'twenty 'twenty four capitalization ratio. Okay. That's clear thank you for that hotel.
Speaker Change: Great. Thank you very much Strosnider them next question. Please our next question comes from Michael Tyndall at HSBC.
Speaker Change: Your line.
Speaker Change: Okay.
Speaker Change: I think our thought.
Speaker Change: I believe in him.
Speaker Change: Just a couple of questions I guess, I mean, sorry back to the tax situation again.
Speaker Change: Talking about detail can you just give us any detail of who you're speaking to in the administration, what sort of frequency because I guess from where I'm, saying you were talking about a negotiated agreement.
Speaker Change: Seems to me as if the Trump administration has got a lot of negotiation. So can you just give us some sense of.
Speaker Change: Listening to you and how you might get some sort of agreement out of those conversations and then the second one you talked about transfer of dealers in China.
Speaker Change: So it's finding new investors I wonder if you could give us just a bit of a flavor as to.
Speaker Change: What are your pitching to those new investors about the future for BMW in China, what are some of those numbers look like because.
Speaker Change: From where we're sitting we've seen the market share of that segment be squeezed I'm wondering what you were telling people in terms of the long term prospects in China. Thanks.
Speaker Change: Okay. Thank you very much the first part of the bridge will be honored by Oliver and then.
Speaker Change: Hi, Tom.
Speaker Change: Yes.
Speaker Change: Good morning, Michael.
Speaker Change: We are deeply rooted in the United States and that's been a proud member of the community for more than 50 years.
Speaker Change: And we talk.
Speaker Change: Two almost all of the stakeholders in that in that really.
Speaker Change: Large network, we have over there.
Speaker Change: Close dialogue with.
Speaker Change: With the communities, including the political.
Speaker Change: In the state of South Carolina, as well as California.
Speaker Change: We of course talk on national level with various stakeholders.
Speaker Change: We also too.
Speaker Change: Trying to exert our influence in the Mexican United States discussion, we have at the same time about <unk> you know that.
Speaker Change: Also talk to our to our customers and I think that's the most important thing what do our customers want to our dealers. We also talk.
Speaker Change: One of the largest steel in the world.
Speaker Change: The Americans and we talk to them with their view on it and out of this wide range of network of discussions we try to exert a strategy.
Speaker Change: Negotiations so it's not only that we talked to one institution, we talk to almost all the stakeholders and trying to make a point.
Speaker Change: Yeah.
Speaker Change: Anytime.
Speaker Change: Hello Tyndall.
Speaker Change: With respect to the dealer network in China. So what are we pitching well we have a future and they are well invested into BMW and why is that because we have a future to tell Mr. Murray class. It we have a new set they can earn money with us.
Speaker Change: That is the key elaboration that would be a much in the lower price segments, where you eventually have to price while studio, which is under 200000 Renminbi. This is not where we are in and you do know the total market of China, 64% of the total markets.
Speaker Change: Enterprise spend less than 150000 women beyond roughly $20000. We are not in that one the next 30 percentage.
Speaker Change: Ending up already on roughly 90, 394% of the total market is up to 300000 trimmed Mb or roughly $40000. This is where we're starting being invested one CRE, which will not have a successor in China, especially now with the three series three and then we start moving into these higher levels of more than 300000 women.
And that is very attractive.
Speaker Change: We all do know that with respect to the market share. It Shouldnt forget one big topic, where we had in the range of $3 nine market share their boss when we have this material prices around the world.
Speaker Change: And therefore surrounded markets under 150000 renminbi was shrinking and the customers who have been able to afford a comp of more than 300000 renminbi.
Speaker Change: <unk> board and automatically or simple and automatically our market share rose.
Speaker Change: Now this markets material prices, it's over since September 2023, and since this lower price segment is growing.
Speaker Change: Digital drawing last year as you're aware of and even this year Q1. It is still the growth driver of the Chinese market is not over 150000, the markets or the share driver.
Speaker Change: 150000, now the sentiment is not as good now as it was eventually two years ago.
Speaker Change: But there is new competitors coming this cost bringing over 500000 renminbi, we highly appreciate those why because competition is good for our business.
Speaker Change: <unk> Chinese brands bring cost for more than 500000, reminbi that opens the door that's customers.
Speaker Change: Allowed or being seen that they can also buy cars in this price range and this is our game and our field of competitors.
Speaker Change: And business, where we can grow this is a lot of opportunity. Once this is opening up of more than 400 or in our case.
Speaker Change: Even 500000 renminbi business, where the opportunities are in and Thats. The reason why we even appreciates these competitors being industry and I'm not in the party to think about well the Chinese local chefs are now up to 70% or 60% last year and they will grow still or local.
Speaker Change: Oems with Silk road in this direction, but I will not be with 100%. So my assumption is still 30% of the total market and future will be.
Speaker Change: Non Chinese Oems and that is our fields and 30% in a market of more than 23 million units is big enough for BMW to take the opportunity to earn money with so that is our assumption on the investors who are investing in absolutely convinced about our products and our future.
Speaker Change: The reason why they invest into because they want to earn money likely.
Speaker Change: Manufactured goods.
Speaker Change: Thank you very much water and so we come to the last question.
Adrian: Our last question comes from Adrian.
Speaker Change: But then.
Adrian: Please on mute your line.
Speaker Change: Good morning, Thanks for taking the question I just have a couple of left a couple left on the U S and demand there.
Speaker Change: Firstly U S industry sales were showing very strong sales rates in April.
Speaker Change: Question is really around consumer demand are you able to comment on order intakes in the U S. Either at the retailer really the wholesale level of course, you worked through dealers there and then your inventory reach into the summer.
Speaker Change: My first question and then secondly.
Speaker Change: Are you seeing any or expect any impacts from changes to U S tax regulations. So specifically section 179, this bonus tax depreciation that's winding down.
Speaker Change: You have an understanding of the take rate within U S sales or have any expectations there.
Speaker Change: Okay. Thank you very much Walter do you want to start.
Speaker Change: Hello, Adrian well first of all the RPC our U S sales are strong not just in April but we also see a good orders take the demand is high and we are not the OEM was stopped producing costs delivering them to the U S. So we are the only.
Speaker Change: Im still producing cost and sending them to the Es and why is that because we are earning money and the dealerships are also earning money with selling BMW cost.
Speaker Change: And with that said our stock level on dealer sites in the U S is underpinning that.
Speaker Change: As I mentioned beforehand, our stock is reaching for.
Speaker Change: Currently 27 days end of April It was 30 days end of March.
Speaker Change: Other ones have even stocking for more than 60 days average as far as I'm aware is roughly 43 base. So among all of those dealers feel more comfortable with less stock on sites that is a relief on extra transactional.
Speaker Change: Downturns. So we have the right stock Mr dealers that means we have a good position for transactional pricing.
Speaker Change: And don't forget if you have some stats.
Speaker Change: With respect to transaction pricing.
Speaker Change: Sales support don't forget that the IRA lease credits on Bev share, where we have 95% leasing on my books.
Speaker Change: It's roughly $2000 that youll have to deduct before you'll see the real cash support.
Speaker Change: So the dealers other Oems have different ratios of course.
Speaker Change: If you take.
Speaker Change: These steps please deduct roughly $2000 that is the mix that you have to take out and then you'll see that as reaching into Q3, so and with respect to U S tax.
Speaker Change: If depreciation is deductible.
Speaker Change: And we will be farmed yourself on right. So we will see.
Speaker Change: Thank you we will see thank you very much the last vote from our CFO. Thank you very much for joining us.
Speaker Change: The best to you and bye bye and samples from unique.
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Speaker Change: Thanks Bill.
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