Q2 2025 Bayerische Motoren Werke AG Earnings Call - Press Conference

[music].

Thanks, ladies and gentlemen.

Maximilian Schberl: Thanks, ladies and gentlemen. Good morning and welcome to the telephone conference of the BMW Group for the second quarter. Today we have here, as always, Oliver Zipse, Chairman of the Board of Management, and our CFO, Walter Mertl. First, Walter will take you through our financial results. Oliver will then give you a general business update for the BMW Group. After a short break, we will then have time for our Q&A session. Walter, please go ahead.

Good morning, and welcome to the telephone conference of the BMW group for the second quarter. Today. We have here is always Oliver <unk> chairman of the board of management and our CFO <unk>.

Matt.

First of all I told me to take you through our financial recites Alibaba will then give you a general business update for the BMW group. After a short break we will then have time for our Q&A session. Please go ahead.

Good morning, ladies and gentlemen.

Walter Mertl: Good morning, ladies and gentlemen. After the first six months of the year, the BMW Group remains on track to meet its full-year targets for 2025. As expected, tariffs weighed significantly on financials in the second quarter. Nevertheless, the BMW Group achieved group earnings before tax of over 5.7 billion euros and a group EBITDA margin of 8.5% in the first six months. In the second quarter, deliveries to customers at group level increased by 0.4% year-on-year. As of June, BMW Group global sales remained on par with last year. All electric vehicles made an important contribution with a share of total sales of 18.3%. The share of electrified vehicles, meaning full electric vehicles or plug-in hybrid vehicles, amounted to 26.4%. Group earnings before tax totaled over 2.6 billion euros in the second quarter and over 5.7 billion euros after six months.

After the first six months of the year the BMW group remains on track.

To meet its full year targets for 2025.

As expected tariffs based significantly on financials in the second quarter.

Nevertheless, the BMW group achieved group earnings before tax of over $5 7 billion euros. The group EBIT margin of eight 5% in the first six months.

In the second quarter deliveries to customers at group level increased by <unk>, 4% year on year.

As of June BMW group Global sales remained on par with last year.

All electric vehicles made an important contribution but the share of total sales of 18, 3%.

The share of electrified vehicles, meaning.

Electric vehicles or plug in hybrid vehicles amounted to 26, 4%.

Group earnings before tax totaled over $2 6 billion euros in the second quarter and over $5 7 billion up to six months.

Walter Mertl: This resulted in a group EBITDA margin of 7.7% in Q2 and 8.5% in the first half year. The operating profit in the automotive segment reached 1.6 billion euros in Q2 and over 3.6 billion euros after six months. This led to an automotive EBITDA margin of 5.4% for the second quarter and 6.2% for the year to the end of June, both within our full-year guidance of 5% to 7%. Excluding the depreciation resulting from the purchase price allocation of BVA, the margin came in at 6.5% for the second quarter and 7.3% through six months. Let's take a look at how the automotive segment performed across key metrics. Between April and June, deliveries of BMW, Mini, and Rolls Royce vehicles to customers were on previous year's level with over 621,000 units. We saw sales growth in all regions except China.

This resulted in a group EBIT margin of seven 7% in Q2, and I don't know half a percent in the first half year.

The operating profit in the automotive segment reached one 6 billion euros in Q2 and.

And over $3 6 billion euros after six months.

This led to an automotive EBIT margin of five 4% for the second quarter.

Six 2% for the year to the end of June both with in our full year guidance of 5% to 7%.

Excluding the depreciation resulting from the purchase price allocation of PVA. The margin came in at six 5% for the second quarter and seven 3% through six months.

Let's take a look at how the automotive segment performed across key metrics.

Between April and June deliveries of BMW mini and Rolls Royce vehicles to customers were on previous year's level with over 621000 units.

We saw sales growth in all regions, except China.

The BMW brands declined slightly by <unk>, 6% compared to the second quarter of 2024.

Walter Mertl: The BMW brand declined slightly by 2.6% compared to the second quarter of 2024. Outside of China, the brand grew by 4.7%. Mini benefited from the full availability of the entire model range and reported a significant year-on-year growth of 33.2% in the second quarter across all regions. Retail sales in Q2 were especially strong in Europe with double-digit growth of 10.2% year-on-year. The European order intake for BMW remains strong with an order bank reaching well into the fourth quarter. The U.S. reported a growth of 1.4% in Q2. In China, retail sales levels in the first six months of 2025 were down 15.5% compared to the previous year. However, during the second quarter, we saw a slight sequential improvement month by month. Sales of our all-electric vehicles continued to grow. In the second quarter, we delivered more than 111,000 all-electric vehicles to customers.

Outside of China, The brand grew by four 7%.

Many benefited from the full availability of the entire model range and reported a significant year on year growth of 33, 2% in the second quarter across all regions.

Retail sales in Q2 were especially strong in Europe with double digit growth of 10, 2% year on year.

The European order intake for BMW remained strong with an order bank, reaching well into the fourth quarter.

The U S reported a growth of one 4% in Q2.

In China retail sales levels in the first six months of 2025 bed down 15, 5% compared to the previous year.

However, during the second quarter, we saw a slight sequential improvement month by month.

Sales of our all electric vehicles continued to grow in the second quarter, we delivered more than 111000, all electric vehicles to customers.

Automotive segment revenues decreased moderately by eight 4% to $29 4 billion in the second quarter.

Walter Mertl: Automotive segment revenues decreased moderately by 8.4% to 29.4 billion euros in the second quarter. Adjusted for currency translation effects, the decrease was 5.3%, mainly due to lower sales volume in China. Segment EBITDA for the period from April to June totaled 1.6 billion euros. The EBITDA margin came in at 5.4% for the quarter and 6.2% for the half year. These margins include the negative effects from extra tariffs, which amounted to around two percentage points in the second quarter and around 1.5 percentage points in the first six months. We mustn't forget the effect from the BVA purchase price allocation I just mentioned. That brings me to my next slide to take a detailed look at the year-on-year changes in the operational result. Automotive EBITDA declined by around 1.1 billion euros compared to the second quarter of 2024.

Adjusted for currency translation effects. The decrease was five 3% mainly due to lower sales volume in China.

Segment EBIT for the period from April to June totaled one 6 billion euros EBIT margin came in at five 4% for the quarter and six 2% for the half year.

These margins includes the negative effects from extra tariffs, which amounted to around two percentage points in the second quarter and around one five percentage points in the first six months.

And we mustn't forget the effect from the BVA purchase price allocation I just mentioned.

That brings me to my next slide to take a detailed look at the year on year changes in the operational results.

Automotive EBIT declined by around $1 1 billion euros compared to the second quarter of 2024.

More than half of this difference is due to the impact of tariffs, which is included in the position other.

Walter Mertl: More than half of this difference is due to the impact of tariffs, which is included in the position Other. Changes in currency and raw material positions were neutral in Q2. But in the second half year, we expect a headwind year-on-year, especially because of Remimbi. The net balance of volume, model mix, and pricing effects negatively impacted EBITDA by 300 million euros in the second quarter compared to the previous year. Volume and model mix combined were neutral. Pricing continues to be a headwind year-on-year, however, to a much lesser extent than in the first quarter. Competitive pressure remains strong, especially in the Chinese market. Here, price levels of the second half of 2024 continued into the first half year of 2025 as expected. Research and development expenses decreased by about 200 million euros compared to the prior year quarter.

Changes in currency and raw material position spend neutral in Q2.

But in the second half year, we expect the headwind year on year, especially because of Reminbi.

The net balance of volume model mix, some pricing effects negatively impacted EBIT by 300 million in the second quarter compared to the previous year.

Volume and model mix combined spend neutral.

Pricing continues to be a headwind year on year, however to a much lesser extent than in the first quarter.

Competitive pressure remains strong, especially in the Chinese markets.

He earned price levels of the second half of 2020 for continued into the first half year of 2025% as expected.

Research and development expenses decreased by about 200 million euros compared to the prior year quarter.

Walter Mertl: Group R&D expenditure as of June totaled 4 billion euros, slightly below previous year. The R&D ratio, according to the German commercial code, came in at 6% after six months. For the full year, R&D expenditure will be below last year's level, and it will steadily decrease over the next years. Selling and administrative expenses also decreased by around 100 million euros compared to the previous year. The year-on-year headwind of 1.1 billion euros from other cost changes can mainly be attributed to two factors. First, the higher tariffs in the U.S. and anti-subsidy tariffs imposed by the EU Commission on electric vehicles from China. Second, the sales of and of lease vehicles. Here, resale income was lower than in the second quarter of 2024, yet remains positive on a portfolio basis. Free cash flow in the automotive segment totaled about €1.9 billion in the second quarter.

Group R&D expenditure as of June totaled 4 billion slightly.

Slightly below previous year.

The R&D ratio according to the chairman for massive boat.

At 6% after six months for the full year R&D expenditure will be below last year's level and they will steadily decrease over the next years.

Selling and administrative expenses also decreased by around 100 million compared to previous year.

The year on year headwind of $1 1 billion euros from other cost changes can mainly be attributed to two factors first the higher tariffs in the U S and anti subsidy tariffs imposed by the EU Commission on the electrified vehicles from China.

And second the sales of end of lease vehicles here resale income was lower than in the second quarter of 2024, yet remains positive on a portfolio basis.

Free cash flow in the automotive segment totaled about $1 9 billion in the second quarter.

Walter Mertl: Segment earning before tax amounted to €1.6 billion, which is €1 billion lower than in the previous year's quarter. The net change in working capital reduced free cash flow by around €300 million. The net effect from capital expenditure and depreciation had an impact of €200 million in the second quarter. Capital expenditure for the first half year amounted to around €2.7 billion, a significant year-on-year reduction of around €700 million. CapEx ratio was 4.5% for the second quarter and 4% for the first six months. After the peak in 2024, CapEx will decrease for the full year 2025, and we expect a CapEx ratio below 6% for 2025. Changes to provisions negatively impacted free cash flow in the second quarter by around €200 million. This was mainly due to the consumption of R&D provisions.

Segment earnings before tax amounted to $1 6 billion, which is 1 billion lower than in the previous year's quarter.

Net change in working capital, which is free cash flow by around 300 million euros.

Net effect from capital expenditure and depreciation had an impact of 200 million in the second quarter.

Capital expenditure for the first half year amounted to around $2 7 billion euros, a significant year on year reduction of around 700 million euros.

The Capex ratio was four 5% for the second quarter and 4% for the first six months.

After the peak in 2020 for Capex will decrease for the full year 2025, and we expect a capex ratio.

Six 6% for 2025.

Changes to provisions negatively impacted free cash flow in the second quarter by around 200 million euros.

This was mainly due to the consumption of warranty provisions.

The change in the position other of around 1 billion euros.

Walter Mertl: A change in the position Other of around €1 billion reflects the development of a set of various topics, including accrued expenses, interest and advance payments received, income taxes, and liabilities for tariff expenses not yet paid. After the first six months, automotive segment free cash flow is on previous year's level, just over €2.3 billion. For the full year, we are targeting a free cash flow of over €5 billion. Our strong free cash flow generation enables us to further execute our consistent shareholder return strategy. In May of this year, the annual general meeting authorized the Board of Management to buy back up to 10% of BMW AG's share capital over the next five years. Based on this authorization, a third share repurchase program with a volume of up to €2 billion was approved. It should be completed by April 30, 2027 at the latest.

To reflect the development of a set of Prs topics, including accrued expenses interest and advanced payments received income taxes and liabilities for tariff expenses not yet paid.

After the first six months automotive segment free cash flow is on previous year's level is just over $2 3 billion euros.

Full year, we are targeting a free cash flow of over 5 billion euros.

Our strong free cash flow generation enables us to further execute our consistent shareholder return strategy.

In may of this year the annual general meeting authorize the board of management to buyback up to 10% of industrial Ashish share capital over the next five years.

Based on this authorization a third share repurchase program with a volume of up to 2 billion euros was approved.

Should be completed by April 32027 at the latest.

Walter Mertl: The first tranche of €750 million began in May, and it will be completed no later than December 8th of this year. Let's move on to the financial services segment. The number of new contracts concluded with retail customers in the first half year reached almost 825,000 contracts, a slight decrease of 3% year-on-year. This is due to the challenging situation on the Chinese market, which led to a moderate decrease in new credit financing business. The new leasing business continued its dynamic growth in the first six months of the year. The penetration rate for lease and loan offerings increased by 2.5 percentage points to 43.7%. Driven by a higher average financing amount per contract, new business volume was on previous year's level despite the slight decrease in new contracts. Segment earnings amounted to just under €1.2 billion, a year-on-year decrease of 19.5%. This results mainly from two topics.

The first tranche of 750 million euros began in may and that will be completed no later than December of this year.

Let's move on to the financial services segment.

A number of new contracts concluded with retail customers in the first half year.

It's almost 825000 contracts a slight decrease of 3% year on year.

This is due to the challenging situation on the Chinese market, which led to a moderate decrease in new credit financing business.

The new leasing business continued its dynamic growth in the first six months of the year.

The penetration rates for lease and loan offerings increased by two five percentage points to 43, 7%.

Driven by a higher average financing amongst our contract new business volume was on previous year's level. Despite the slight decrease in new contracts.

Segment earnings amounted to just under $1 2 billion a year on year decrease of 19, 5%.

This results mainly from two topics. In addition to provisions following the receipt of a revised operational tax assessment for prior years.

Walter Mertl: In addition to provisions following the receipt of a revised operational tax assessment for prior years, the resale income of lease vehicles, which was lower than in the second quarter of 2024, yet remains positive on a portfolio basis. A credit loss ratio across the entire loan portfolio remained at a low rate of 0.27%. In the motorcycle segment, deliveries decreased moderately by 8% year-on-year. Segment revenues decreased by 2.8%. Adjusted for currency translation effects, they were on par with the second quarter of 2024. Segment EBITDA in the second quarter totaled €136 million with an EBITDA margin of 14.2%. Ladies and gentlemen, our outlook for the full year is based on assumptions, which are described in detail in our half-year report. Let me briefly mention some key factors for our business development in 2025.

And the resale income of end of lease vehicles, which was lower than in the second quarter of 2020 for <unk> remains positive on a portfolio basis.

The credit loss ratio across the entire loan portfolio remained at a low rate of two 7%.

And the motorcycle segment deliveries decreased moderately by 8% year on year.

Segment revenues decreased by two 8% adjusted for currency translation effects.

The second quarter of 2024.

Segment EBIT in the second quarter totaled 136 million euros with an EBIT margin of 14, 2%.

Ladies and gentlemen, our outlook for the full year is based on assumptions, which are described in detail in our half year report.

But let me briefly mentioned some key factors for our business development in 2025.

In China, we have been observing increased monitoring of the automotive market by local regulatory authorities since the last two weeks of June.

Walter Mertl: In China, we have been observing increased monitoring of the automotive market by local regulatory authorities since the last two weeks of June. This also affects commissions payments from local banks to dealerships in connection with brokering retail financial and insurance products, payment terms to the supplier base, as well as increased scrutiny of price competition. Dealer commissions were significantly reduced by local banks in June. We are closely following these developments and their potential impact on the Chinese automotive market. Ladies and gentlemen, as you recall, our guidance given in March included all tariffs in force as of March 12th. In our quarterly statement for Q1, we had assessed and included all tariff increases announced as of May 7th and confirmed our original guidance based on certain assumptions. In today's half-year report, we maintain our consistent approach and have also incorporated the effects of all latest announcements.

As also effects commissions payments from local banks to dealerships in connectionist, brokering retail financial and insurance products.

Payment terms to the supplier base as well as increased scrutiny of price competition.

Dealer commissions were significantly reduced by local banks in June.

And we are closely following these developments and the potential impact on the Chinese automotive market.

Ladies and gentlemen.

As you recall our guidance given in March included all tariffs enforced as of March 12.

And our quarterly statement for Q1, we had assessed and included all tariff increases amounts as of May seven and confirmed our original guidance based on certain assumptions.

And then today's half year reports, we maintained our consistent approach and have also incorporated the effects of all latest announcements.

Walter Mertl: According to the announcement on July 27th, an agreement between the U.S. and the EU regarding the tariff situation is emerging. Based on published information by the respective authorities, we expect partial reductions of the currently applicable tariffs between the U.S. and the EU from August 1st. Additionally, tariff negotiations across the globe are ongoing and may result in further changes. Therefore, the expected impact from tariffs on our full-year results can still only be estimated based on our certain assumptions. For the full year 2025, we currently expect a burden from tariffs of around 1.25 percentage points on the EBITDA margin in the automotive segment, including mitigations. Based on our assumptions, the full-year outlook remains unchanged. That means on a group level, we are targeting earnings before tax at previous year's level.

According to the announcement on July 27th an agreement between the U S and the EU regarding the tariff situation is emerging.

Based on published information by the respective authorities, we expect possibly reductions of the currently applicable tariffs between the U S and the EU from August Trust.

Additionally, tariff negotiations across the globe are ongoing and May result in further changes.

Therefore, the expected impact from tariffs on our full year results and still only be estimated based on our certain assumptions.

For the full year 2025, we currently expect the burden from tariffs of around 1.25 percentage points on the EBIT margin in the automotive segment, including mitigation.

Based on our assumptions to full year outlook remains unchanged.

That means on a group level, we are targeting earnings before tax of previous year's level and.

Walter Mertl: In the automotive segment, we expect a slight increase in deliveries and an EBITDA margin in a corridor between 5% and 7%. The EBITDA margin in the motorcycle segment should come in at between 5.5% and 7.5%. In the financial services segment, we expect a return on equity in the range of 13% to 16%. Ladies and gentlemen, the BMW Group is a truly differentiated global player. This strong strategic positioning enables us to mitigate the impact of tariffs and allows us to adapt swiftly to changing market conditions. The BMW Group has a focused strategy and a clear plan on how to effectively navigate our operating business. As a result, we were able to provide a comprehensive guidance for the year 2025 in March, including the impact of tariffs.

In the automotive segment, we expect a slight increase in deliveries and an EBIT margin in a corridor between five and 7%.

The EBIT margin and motorcycle segments come in at between five five and seven 5%.

In the financial services segment, we expect the return on equity in the range of 13% to 6%.

Ladies and gentlemen, the BMW group is a truly differentiated global player.

This strong strategic positioning enables us to mitigate the impact of tariffs and allows us to adapt swiftly to changing market conditions.

The BMW group has a focused strategy and a clear plan how to effectively navigate our operating business.

As a result, we were able to provide a comprehensive guidance for the year 2025 March including the impact of tariffs.

Walter Mertl: We delivered an EBITDA margin within the full-year target corridor of 5% to 7%, both in the second quarter and for half year. At the BMW Group, we are steering our business carefully and in a consistent manner. During the last years, we significantly invested in the future of our company in line with our long-term planning. In 2024, both CapEx and R&D reached peak levels. Starting in 2025, we are reducing CapEx and R&D spending as planned. Our operating costs are also decreasing compared to prior year. Just as in Q1, this is again evident in our Q2 figures. Based on the results of the first six months, we once again confirm our full-year targets for 2025. We remain committed to our long-term goals of premium profitability and capital return to create value for all of our stakeholders. Thank you.

And we delivered an EBIT margin within the full year target corridor of 5% to 7% both in the second quarter and for half year.

At the BMW group, we are steering our business carefully and in a consistent manner.

During the last years, we significantly invested in the future of our company in line with our long term planning.

2020 for both Capex and R&D reached peak levels, starting in 2025, we are reducing capex and R&D spending as planned.

Our operating costs are also decreasing compared to prior year.

Just as in Q1 this was again evident in our Q2 figures.

Based on the results of the first six months, we once again confirm our full year targets for 2025.

And we remain committed to our long term goals of premium profitability and capital return to create value for all of our stakeholders. Thank you.

Thank you very much Lloyd turn now over to our CEO Oliver.

Maximilian Schberl: Thank you very much, Walter. Now over to our CEO, Oliver Zipse. Please.

Please.

Ladies and gentlemen, good morning.

Oliver Zipse: Ladies and gentlemen, good morning. Thanks to the strength and foresight of our strategy, our attractive product portfolio, and our global team and operations, the BMW Group is built to weather various conditions. It underscores that there is not one automotive industry; there are players with different strategic approaches. Through the first half year, our sales performance demonstrates the appeal of our global brands and the ongoing success of our broad technological approach. After confirming our original guidance from our annual conference after the first quarter results, we remain on track with our financial targets for the year, despite ongoing tariff uncertainty and fluctuations in the Chinese market. Unpredictability is a long-standing feature of the auto industry and is the norm in today's business environment. What is decisive is how you deal with it.

Thanks to the strength and foresight of our strategy, our attractive product portfolio and our global team and operations. The BMW group is built to weather various conditions.

And it underscores that theres not one automotive industry there are players with different strategic approaches through.

Through the first half year, our sales performance demonstrates the appeal of our Cobra brands and the ongoing success of our approach technological approach.

After confirming our original guidance from our annual conference. After the first quarter results, we remain on track with our financial targets for the year.

<unk> ongoing tariff uncertainty and fluctuations in the Chinese market.

Unpredictability in the longstanding feature of the auto industry and its the norm in today's business environment.

What is the size it is how you deal with.

Oliver Zipse: Global success is rather predicated on your ability to anticipate developments and to respond rationally and efficiently. That is fundamental to the BMW Group. The overall global automotive market is growing. We are always ready to profitably gain market share wherever individual market conditions allow. As dynamics in the industry shift, we know exactly where we are placed with our premium brands and where we can pursue opportunities, maintaining a healthy balance of value creation and market share. Over many decades, we have built up a comprehensive and balanced network of sales, production, and supply chain operations spanning the major regions. This makes us one of the few truly global players in the industry, and our deep roots in global markets offer us many advantages. First, they allow us to tap into leading-edge developments in the individual markets and understand specific customer needs.

Because global successes, rather predict predicated on your ability to anticipate developments and to respond rationally and efficiently.

That is fundamental to the BMW group.

The overall global automotive market is growing we are always ready to profitably gain market share wherever individual market conditions allow.

As dynamics in the industry shift, we know exactly where we are placed with our premium brands and where we can pursue pursue opportunities.

Maintaining a healthy balance of value creation and market share.

Over many decades, we have buildup comprehensive and balanced network of sales production and supply chain operations.

<unk> the major regions.

This makes us one of the few truly global players in the industry and our deep roots in Pilbara markets across many adventures.

First.

They allow us to tap into leading edge developments in the individual markets and understand the specific customer needs.

Oliver Zipse: Our ties to research universities, our R&D network and IT hubs, and our network of local tech partners enable us to leverage key competencies from individual markets for our global products and strategy. Second, through our extensive footprint in key markets, we remain resilient in the face of geopolitical instability and ever-increasing regulation. Finally, our strong ties also allow us to engage in direct discussions with key political decision-makers who value our perspective. Here, it is not just about our individual interests, but rather finding solutions for customers worldwide and driving shared economic prosperity. The BMW Group welcomes a fundamental agreement between the European Union and the United States to reduce tariffs on both sides of the Atlantic. It is now important to quickly finalize and implement the agreed measures. We will continue to advocate for trade between the EU and the U.S. not to be hindered by import tariffs.

Our ties to research universities.

Our R&D network and hubs and our network of local Tech partners enable us to leverage key competencies from individual market for our global products and strategy.

Second through our extensive footprint in key markets, we remain resilient in the face of geopolitical instability and ever increasing regulation.

And finally, our strong ties also allow us to engage in direct discussions with key political decision makers, who value our perspective.

Here. It is not just about our individual interests, but rather finding solutions for customers worldwide and driving shared economic prosperity.

The BMW group welcome fundamentally agreement between the European Union, and the United States to reduce tariff from both sides of the Atlantic.

And its now important to quickly finalize and implement the accrete measures.

We will continue to advocate for trades between the EU and the U S not been hindered by and prepare.

Oliver Zipse: The currently agreed U.S. tariffs also burden European exports, affecting consumers and globally operating companies. Therefore, we urge both sides to continue working towards market openness and the convergence of technological regulations. Through our global production network and supply chains, we maintain high flexibility to respond to fluctuations. Our production plans are attuned to market demand, allowing us to achieve capacity utilization above the industry standards. At our larger single plant in Spartanburg in the United States, for example, we produce over 420,000 vehicles annually, over half of which serve the local market and half of which we export. Across the United States, we have created extensive value chains, as well as a competency hub for our global X family of vehicles in Spartanburg, which remain in high demand across the entire globe. BMW made in America and sold to the world.

The currently agreed U S tariffs on suburban European exports affecting consumers and globally operating companies.

Therefore, we urge both sides to continue working pellet market, the openness and the convergence of.

Technological regulations.

Through our global production network and supply chain, we maintain high flexibility to respond to fluctuations.

Our production plants are attuned to market demand, allowing us to achieve capacity utilization above industry standards.

At our lots of similar plant in Spartanburg in the United States. For example, we produce over 420000 vehicles annually.

Over half of which serve the local market effort, which we export.

Across the United States, we have created extensive bellevue changed as well as the competency hub.

For our global ex assembly of the hiccups in Spartanburg, which remain in high demand across the entire coal.

BMW made in America and sold to the World.

This combination of leveraging the competitive advantage the U S market and Suvs with brands BMW brand strength allows us to develop product, which speak to customer needs and markets worldwide.

Oliver Zipse: This combination of leveraging the competitive advantage of the U.S. market in SUVs with BMW's brand strengths allows us to develop products which speak to customer needs in markets worldwide. For the current financial year, our sales results continued into Q2 in line with our expectations as conditions continue to vary from market to market. In Q2, we saw a substantial improvement from Q1. Outside of China, all three of our major sales regions posted growth. Group sales in these markets combined to grow by 6.3% through the first six months of the year. Group sales in Europe grew overall by 10.2% in the second quarter and in Germany alone by over 10%, with growth in most markets outpacing the passenger vehicle market. Overall, the BMW brand increased its market share in Europe. Among the most successful BMW models were those in the business class segment.

For the current financial year, our sales results continued into Q2 in line with our expectations as conditions continue to vary from market to market.

In Q2.

Saw a sequential improvement from Q1.

Outside of China.

Three of our major sales regions posted growth.

Group sales in these markets combined to grow by six 3% through the first six months of the year.

Group sales in Europe grew overall by 10, 2% in the second quarter and in Germany alone by over 10% with growth in most markets outpacing the passenger vehicle market.

Overall, the BMW brand increased its market share in Europe.

Among the most successful BMW models were those in the business classic and.

Oliver Zipse: In the first half of the year, the BMW 5 Series saw growth of more than 40% worldwide compared to 2024. Other notable models saw success, including the BMW X2 models, which more than doubled sales through June. With the full availability of the new Mini family, the brand grew in all regions worldwide, including in China. In the first half of the year, more than one in three Minis sold was a fully electric vehicle. Rolls Royce increased deliveries by nearly 10% in the second quarter, driven by strong sales from the Cullinan Series 2. Drivetrains and model variants across the portfolio continue to see success in Q2. BMW M sold nearly 106,000 vehicles through June, the best ever first half year of the brand. Sales of plug-in hybrid models from the BMW brand grew by almost 30% in the first six months.

In the first half of the year. The BMW five series saw growth of more than 40% worldwide compared to 2024.

Other notable model sell success, including the BMW X two models, which more than doubled sales through June.

For the full availability of the new many family the brand grew in all regions worldwide, including in China.

In the first half of the year more than one in three minutes sold was fully electric vehicles.

Bold choice increased deliveries by nearly 10% in the second quarter driving by strong sales from the TV series two.

Drivetrains and model variants across the portfolio continue to see success in Q2.

W. M. So nearly 106000 vehicles through June the best ever first half year the brands.

Sales of plug in hybrid models from the BMW brand grew by almost 30% in the first six months.

Oliver Zipse: Our best models continue to be a fundamental pillar of our strategy. In the second quarter, we achieved an important milestone with the delivery of our 1.5 million all-electric vehicles. Across the portfolio, we now offer more than 15 all-electric models. In Europe, the group's best share reached 25%. With the PHEVs included, the electrified share reached nearly 40%. Across all brands, BMW is the third best-selling BEV brand in Europe. While we are proud of our position as a leading BEV player, we know that the world is multidimensional. To meet consumer needs, especially in a product as complex and personal as a car, there is no single answer. Our Q2 results show that we can serve multiple preferences simultaneously. BEVs, PHEVs, and our M models all achieve growth. The most effective strategic approach is to use all technology to reduce CO2 emissions overall.

Our best models continued to be a fundamental pillar of our strategy in the second quarter, we achieved an important milestone with the delivery of our $1 5 million all electric vehicle.

And across the portfolio now we offer more than 15, all electric models.

In Europe, the troops best share reached 25%.

Perhaps include electrified share reached nearly 40% and across all brands BMW third best selling best brand in Europe.

While we are proud of our position as the leading best player.

Note that the world is multi dimensional.

To meet consumer needs, especially in our product is complex and personnel as a car there is no single answer.

Our Q2 results show that we can serve multiple preferential simultaneous.

Yes, Pete Hess and our models all the cheap cost.

The most effective strategic approach is to use all technology to reduce cotwo emissions overall.

We remain committed to the goals of the Paris climate agreement on advocating for rescue of the 2030 and 2035 targets in the European Union.

Oliver Zipse: We remain committed to the goals of the Paris Climate Agreement while advocating for a review of the 2030 and 2035 targets in the European Union. To achieve these goals and create effective CO2 regulations, we must take a comprehensive view across the entire value chain. This would consider all emissions across the entire lifecycle and not just tailpipe emissions. From the supply chain to the raw materials used in the car, the production process, the vehicle drive, energy used to power the vehicle, and finally, all the way up to recycling. Dependency on a single technology can be damaging to an industry. Putting all your eggs in one basket is just poor asset allocation.

To achieve these goals and trade effective <unk> regulations, we must take a comprehensive view cross the entire value chain.

This would consider all emissions across the entire lifecycle and not just tailpipe emissions from the supply chain to the raw materials used in the car the production process to basically drive energy used to power the vehicles and finally, all the way up to recycle.

And dependency on a single technology can be damaging to an industry.

In all your eggs in one basket, it's trust, who or asset allocation.

Hydrogen for example offers <unk> an opportunity to use our expertise and take the lead on the merchant technology that will contribute to our climate goals and unlike bets without the need for larger amounts of raw materials for four or battery technology, which are not localized bowl at.

Oliver Zipse: Hydrogen, for example, offers European opportunity to use our expertise and take the lead on an emerging technology that will contribute to our climate goals. Unlike BEVs, it is without the need for large amounts of raw materials or battery technology, which are not localizable at large scale in Europe. Beyond drivetrains, there is great potential with alternative fuels. There are more than 250 million vehicles in the EU, which could now immediately contribute to climate protection. This requires a clear regulatory pathway and targeted investment in the ramp-up of all renewable fuels. The Hafer O100 is an example. While it is already available in markets across Europe, tax schemes and the CO2-free targets need to recognize this renewable fueling option to incentivize customer adoption. This would also help in scaling an alternative fuel that has a 90% CO2 saving compared to normal fuels and can already be accessed today.

Large scale in Europe.

Beyond Drivetrains.

Potentially with alternative fuels.

More than 250 million vacates in the EU, which could now immediately contribute to climate protection.

But this requires a clear regulatory pathway and targeted investments in the ramp up of all renewable fleets.

The hopper or 100 as an example.

While it is already available in markets across Europe, TEQ schemes and the tier two fleet targets Mitra recognized this renewable fuel and option to incentivize customer adoption.

This would also help in scaling and alternative fuel that has 90% tier two saving compares genome acute and can already be at <unk>.

Access today.

Oliver Zipse: For OEMs and customers, this is also a cost-effective way to reduce emissions in the use phase. For Europe to maintain competitiveness and finance its future, we need to invest not only in new technologies but also leverage our existing technologies, which can meet customer preferences and still contribute to climate targets. For the BMW Group, we are now just five weeks away from the next major innovation step, which our entire company has been fully focused on for many years now: the launch of the NEUE KLASSE. On September 5th, we will celebrate the world premiere of the all-new BMW iX3 at the IAA Mobility here in Munich. In June, we hosted media representatives at the pre-drive event in Miramas in southern France. The initial feedback has been tremendous. We remain right on time with the launch, including at our new plant in Debrecen.

For Oems and customers. This is also a cost effective way to reduce emissions in the use phase.

For Europe to maintain competitiveness and finance its future we need to invest not only in new technologies, but also leverage our existing technologies, which can meet customer preferences and still contribute climate targets.

While the BMW group, we're now just five weeks away from the next major innovation step, which our entire company has been fully focused on for many years now the launch of the <unk> asset.

On September 5th.

We will celebrate the world premiere of the all new BMW three years.

Mobility here in Munich.

In June we hosted media representatives at the prescribed event in melanoma in southern France.

Initial feedback has been tremendous.

And we remain right on time with the launch including at our New plan.

Yes.

Oliver Zipse: Construction also continues at our battery assembly facility in Elbach-Karskes. With the NEUE KLASSE, we are making great strides in all relevant technology fields, whether in electrification, digital user experience, driving dynamics, or sustainability. The new BMW iX3 will be a benchmark in our industry. The all-electric sixth-generation powertrain will set standards in performance and efficiency, powered by our battery cells developed in-house, with 20% more energy density, an electric range of up to 800 kilometers according to WLTP. With 400 kilowatt maximum charging, customers will be able to add over 350 kilometers to their vehicle's range in just 10 minutes according to WLTP. This is with an energy consumption of 50 kilowatt hours per 100 kilometers. In addition, our revolutionary new iDrive changed the way the driver interacts with the car. With the BMW iDrive, we set an industry standard more than 20 years ago.

Construction also continues at our battery Assembly facility in Bilbao casket.

With the <unk> platform, we are making great strides in all relevant technology fields, whether in electrification digital user experience driving dynamics or sustainability.

The new BMW IX III will be a benchmark in our industry.

The all electric sixth generation powertrain will set standards and performance and efficiency.

Hour by hour battery cells developed in house with 20% more energy density and electric range of up to 800 kilometers according to <unk> LTE.

With 400 kilowatt maximum charging customers will be able to add over 350 kilometers to their behavior trends in just 10 minutes. According to <unk> LTE.

And with an energy consumption of 50 kilowatt hours per 100 kilometers.

In addition, our revolutionary New <unk> five we changed the way the driver interacts with the car.

But the BMW <unk> research an industry center more than 20 years ago.

Oliver Zipse: After the reveal of the all-new panoramic iDrive at CES in January, we are already seeing the industry follow our lead. With the technology clusters we have developed for the NEUE KLASSE, we will scale our advanced technologies across the portfolio. We will start in the core segment to build momentum quickly. This is simply smart economics. By 2027, we will bring 40 new models and model updates with the NEUE KLASSE technology and design language on the road worldwide. Our technology cluster approach allows us to integrate market-specific features and content. In our major sales regions, we have a variety of local solutions with leading partners. This allows us, for example, to further enhance the digital user experience as well as automated driving functions in our upcoming NEUE KLASSE models.

After the reveal of the all new panoramic IGF at CES in January we are already seeing the industry follow our lead.

With the technology clusters, we have developed for the noise, we will scale, our advanced technologies across the portfolio.

We would start in the core segment to build momentum quickly.

This is simply smart economics.

2000, 2007, we will bring 40, new models and model updates with an oil cut of technology and design language on the road worldwide.

Our technology cluster approach allows us to integrate market specific features and content.

And our major sales regions, we have a variety of local solutions with leading partners.

Now as US for example to further enhance the digital user experience as well as automated functions and our upcoming OA class models.

Oliver Zipse: In China, for example, we are collaborating with Alibaba Banma to develop the next level of intuitive and conversational in-car voice interaction. We will also enhance our BMW intelligent personal assistant with functionality from deep seat in our vehicles in China. In most other countries, the next-gen BMW intelligent personal assistant will be powered by large language model technology from Amazon Alexa. For driving assistance systems that meet local needs and regulations, we have also sought out partners in different geographies, always following our philosophy in this area: smart, symbiotic, and safe. Just two weeks ago, we announced a new partnership with Momentum, a leading Chinese ADAS technology provider. The partnership will focus on software development and integration for Chinese road networks, traffic conditions, and user expectations, utilizing advanced AI algorithms and data-driven development methods. We will launch the systems in China, starting with our NEUE KLASSE.

In China. For example, we are collaborating with Alibaba bundle to develop the next level of intuitive and conversational in power voice interaction.

Will also enhance our BMW intelligent personal assistance with functionality from deep sea in our vehicles in China.

In most other countries. The next Gen BMW intelligent personal assistant will be powered by large language module technology from Amazon Alexa.

But driving assistance systems that meet local needs and regulations. We have also sought out partners in different geographies.

Following our philosophy in this area.

Smart symbiotic and safe.

Just two weeks ago, we announced a new partnership with momentum, leading Chinese Adas technology provider.

The partnership with focus on software development and integration for Chinese Road network traffic conditions and user expectations utilizing advanced AI AI algorithms and data driven development methods.

We will launch the systems in China, starting with our Nols.

Oliver Zipse: In other markets, we continue to build on our already very successful partnership with Qualcomm. These examples show how adept the NEUE KLASSE architecture is. With the software-defined vehicle, we maintain competency over all systems of the car and can roll them out to markets at the same time across the world. We are also able to quickly integrate local tech stacks into our own ecosystems to give consumers access to innovations and features they are used to. Through backward integration of software solutions available for all aspects of the vehicle over the air, we will continuously enhance the customer experience. This overall is a huge advantage for us. Ladies and gentlemen, our consistent strategic approach and continued success is not a coincidence, but the result of resolute long-term planning and orientation. It is a multi-year process in every area of the company.

In other markets, we continue to build on our already very successful partnership with Qualcomm.

These examples show our adapted noise.

With the software defined vehicle, we maintain competency overall system, both the car and 10 rolled them out to market at the same time across the world.

But we also are able to quickly integrate locate <unk> into our own ecosystem, if consumers access to innovations and features they're used to.

And through backward integration of software solutions available for all aspects of the vehicle over the air.

Tenuously enhance the customer experience.

This overall is a huge advantage for us.

Ladies and gentlemen, our consistent strategic approach and continued success is not a coincidence, but the results of resolute long term planning and orientation.

It is a multi year process in every area of the company.

Oliver Zipse: That is what our stakeholders expect from us. The BMW brand is a promise, and we deliver on our promises. We continue to build upon the strong position we are in today, and with the rollout of NEUE KLASSE technologies and products over the next two years, we will bring the company to a whole new level. Thank you.

That is what our stakeholders expect from us.

The BMW brand is a promise and we deliver on our promises.

We continue to build upon the strong position we are in today and with the rollout of <unk> technologies and products over the next two years, we will bring the company to a whole new level. Thank you.

Thank you very much Oliver ladies and gentleman, we now have a short break before we move onto the Q&A sessions.

Maximilian Schberl: Thank you very much, Oliver. Ladies and gentlemen, we now have a short break before we move on to the Q&A sessions. See you in five.

Five minutes.

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Maximilian Schberl: Great. Welcome back to the second part of our half-year report. We will now continue in Germany. After the short break just now, we are now looking forward to taking your questions. As always, you will be provided with some technical instructions before we then begin with the first question. Ladies and gentlemen, we are now beginning the Q&A session. If you would like to ask a question, please raise your hand using the function at the lower bottom of the screen. If you have dialed in by telephone, push the asterisk button and nine. Then you will be given the opportunity to ask your question in order to receive it. As soon as your question has been announced, you can ask it. In order to withdraw a question, just put down your hand using the function in the Zoom app.

So I'll come back to the second part.

Sure.

It is important to maintain hospitals fall back to stimulate now looking forward to taking your questions as always.

We will be provided.

The current structure fully Ben speaking.

Yeah.

Ladies and gentlemen.

Well now begin the Q&A session. If you would like to ask a question.

Please raise your hand.

Using the functions to lower cost.

Starting by telephone.

Push the asterisk nine.

And you will be given the opportunity to ask a question.

So thats your question.

In order to withdraw a question just put down your handwriting functions in Brazil.

Maximilian Schberl: If you are on the telephone, just press the asterisk button and nine. Thank you. In just a minute for the first question. First question comes from Christina Amann from Reuters. Please unmute yourself now.

Or on the telephone just press the estimate.

Thank you and just the need for the first question.

First question comes from.

Income from Atlanta.

Thanks, Amit.

Thank you Leanne.

Journalist (various, e.g. Christina Amann, Markus Kassler, Christoph Würmeier, etc.): Good morning.

Maximilian Schberl: Thank you for allowing me the first question. I hope you can all hear me. Yes, we can hear you, Ms. Amann. Wonderful. Other question relating to the tariffs. Perhaps you can quantify how much did the tariffs cost you in the past quarter? These are the two topics, aren't they? U.S. tariffs and the Chinese tariffs. Second question, also on tariffs. The agreement of the E.U. and the U.S. means 15% import tariffs into the U.S., 2.5%, and later 0% for goods coming from the U.S. going into Europe. Perhaps you can provide some clarity as to what that means for you and how you will proceed. Will the positive or the negative effects prevail, or are they more or less balanced? In your forecast, you made reference to mitigating measures. Perhaps you could explain what is meant by that.

Thank you.

The first question.

Hope to Amy.

Yes, we can hear you.

Wonderful.

I have a question relating to the tariff, perhaps you could quantify.

How much of the tax cost you in the past quarter, I mean, basically to U S tariffs and the Chinese parents second question.

On Paris.

The agreement of the EU and the U S means 15% import tariff in continue at two 5% in data center.

Coming from the U S going into Europe.

Can provide some clarity that meaningfully.

And how we will proceed.

We have a positive or a negative in fact prevail or.

Are they more or less balanced.

And your forecast you make reference to mitigating measures, perhaps you cut it.

<unk> was named by that.

Maximilian Schberl: Does it mean price increases, or what's the strategy that BMW Group is pursuing here? Thank you. Thank you, Ms. Amann. We've understood all of your questions. Mr. Zipse will begin later than Mr. Mertl. Good morning, Ms. Amann. Let me just say something more general on the tariff discussion. Free trade and international cooperation are extremely important for all industries. Globally, there's not a single technology that would be able to survive without global trade. Obviously, that's something that's often neglected when we talk about tariffs. These global links, that network that is just there, that's something you always have to bear in mind when you talk about tariffs and talk about how you can be more resilient, how you can protect yourself. Any type of tariff, no matter in which direction, leads to higher costs and disadvantages for consumers. That must be emphasized.

Does it mean price increases or what's the strategy that say.

Thank you.

And Kevin among this understood all of your questions.

I'll begin.

Good morning.

Let me just say something more tangible on the tariff discussion.

Free trade and international coal pricing.

And it's been important for all of <unk> globally.

Think of technology.

Be able to survive without global trade, obviously, thats something thats helpful.

Can you talk about talent.

If closer links that network.

That's something you always have to bear in mind. When you talk about talent can you talk about how it can be Morgan Stanley and how you can protect yourself.

I mean any type of tariff.

No matter, which direction to higher costs and disadvantages for all consumers.

We emphasize.

Maximilian Schberl: Therefore, the fewer trade obstacles, the better it is, especially for companies doing global business. This is why we're always much in favor of reducing trade barriers and tariffs. Returning to the current ongoing discussion, of course, we welcome the general agreement between the European Union and the U.S. to reduce tariffs on both sides of the Atlantic. So that's a good thing to begin with. It's good what's been achieved. You don't need to talk bad about it. The next step is to finalize the measures agreed on and to implement them. We are supporting the European Union explicitly in this respect, especially the E.U. Commission, with a clear reduction of import sales down to 0%. It would reflect the fact that more than 80% of cars from the U.S. are actually made by German companies.

For.

The trade.

<unk> optical spectrum, especially for companies to a global business.

This is why the always merchant type of opportunities same type batteries talents.

Now turning.

Turning to the current ongoing discussion of course, we welcome to Chunghwa agreement between New York and Muni MPLX so against tariffs on both sides of the Atlantic. So Thats a good thing to begin with it's been what's been achieved.

You can see.

Now.

Next step is to finalize the <unk>.

Incrementally we are.

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Actually the EU Commission.

With a clear reduction of input salt.

That reflects the fact that more than 80% of cost.

It's actually made by the company certainly the interest in companies to really bring EU ex U EU tariffs.

Maximilian Schberl: So it is in the interest of European companies to really bring the EU tariff to zero without any restrictions by further technical parameters. This is why we will also support this being made possible. We would like to appeal to both sides to continue to work on opening the markets and also on working on the convergence of technology rules. But Walter Mertl will now briefly say what is on the financial repercussions. Hello, Ms. Amann. In the second quarter, the effect is reflected in about two EBITDA percentage points. That is the impact we have here. On May 7, we said this is the major impact in the second quarter because this is where the largest tariffs applied. What we had expected was that in the third quarter, tariffs would be reduced due to trade agreements between the U.S. and the remaining states. This is actually what happened.

Anyway <unk>.

Parameters.

This is slightly to allstate.

And support this in the past couple of blacks appear to add sites to continue to work on opening new markets and also unlucky.

Technology.

That's a macro we're not basically saying what's on the financials with the passage.

And then.

In the second quarter.

Secondly about to EBIT.

Thank you two points.

Okay. That's the impact we have here and then second may make.

The major impact.

In the second quarter, because this is where the largest tax planning.

What we had expected was that in the third quarter status will be reduced due to trying to premiums between the U S.

Remaining states and this is actually what happened.

And it's okay reached an agreement with the EU as well some might be in an air ticket side, but if you look today home pages of the white house or the EU and you see the conclusions within quite clear and strong but first of all the things that for vehicles and for vehicle components in <unk>.

Maximilian Schberl: The U.K. reached an agreement. There is an agreement with the EU as well. Some might be a little irritated by it, but if you look to the home pages of the White House or the EU and you see the conclusions, we are seeing quite clear and strong words. First of all, we are saying that for vehicles and for vehicle components, imports into the U.S. will be exposed to 15% tariff, and there will be 0% for goods going into the EU. First of all, this is from when on this will apply. Now, mitigating effects. This is something we have already been using. This relates to the footprint of our plants and the supply chain. It is not the same for all manufacturers. You know what ours is. Of course, let us also not forget that a free trade area in the U.S.

Yes.

And we expect <unk> and Paas and <unk> zero percent sure Bernstein.

Yes.

And first of all.

Some weight on the slide now.

Now mitigating effects.

This is something thats already been using this relates to the footprint of our plants and supply chain is not the same for all manufacturers do you know what allergan.

Let's also not forget.

That's a free trade.

All of that in the U S is still intact with selling from this patent that plant more than 50% out of the U S.

Maximilian Schberl: is still intact. We are selling from the Spartanburg plant more than 50% out of the U.S. We are exporting. Because it is a free trade area, no tariffs apply to those. So that is zero tariffs. That applies to us as well. Others might export other percentages, and there are other effects. But the 3.75%, according to the executive order, also applied to us for cars produced in Spartanburg. Obviously, that also applies to us. That is also a mitigating measure. Thank you. Next question, please. Next question is by Markus Kassler from Handelsblatt.

We're exporting and because it's a free trade area.

No Tom supplied today.

So thats.

And that applies to us it's about other smart export other expenditures.

Is that the effect that the $3 seven 5%. According to the executive order ultra tight glass for cars produced in snapping back and obviously it also applies to us and Thats also on mitigating measure. Thank you.

Thanks, Tony specialties.

Next question each time.

<unk> hundred flats.

Good morning, gentlemen.

Journalist (various, e.g. Christina Amann, Markus Kassler, Christoph Würmeier, etc.): Good morning, gentlemen. I would like to stay with the topic of tariffs as well. Mr. Zipse, like the rest of the German industry, your hope is that more can be achieved in those agreements. The offsetting model so that imports and exports from the U.S. could sort of be balanced or offset against each other so that we are much better off in the end compared to what has been achieved now. Question, do you still see any chances that this offset model, imports and exports to offset one another, that that could still be realized? What would that mean for you then? That is my first question. My second question, what does it mean for the relationship between the U.S. and Europe? Has the European, has the economic area of the two been strengthened? Do you expect there will be more investment from your industry in the U.S.?

I'd like to stay with the topic of tariffs smile.

Mr Simpson.

Like the rest of the journey will help it.

That more can be achieved.

The offsetting modern set of imports and exports from the U S.

But sort of a downturn for a second.

So that they're much better off.

Compared to what it's been.

It is now.

But do you still see any chances that this offset model inputs.

To offset one another.

But that could still be realized.

What that meaningfully what would that mean for you then that's my first question and the second question.

What does it mean.

Four.

The relationship.

It's in the USA Europe.

Has the European economic area of the <unk>.

There'll be more investment from your industry in the U S. It was kind of a possible answer of the E&P. So we.

Journalist (various, e.g. Christina Amann, Markus Kassler, Christoph Würmeier, etc.): What can the possible answer of the E.U. be? Do we have to reconsider how we can improve the attractiveness of the location? What does the E.U. now have to do? Because this deal all in all is at a disadvantage for the European industry. At least that is how it is perceived by many parties. Thank you. Thank you, Mr. Kassler. I will pass it on to Mr. Zipse. Your first question, the offset logic. You see, politics is always about what is feasible. I think what is important now is to take the first step, which is now in sight, and to agree on it, namely reducing tariffs on both sides. That would be a first important step. Whether or not in a second step, we conclude yet another offset agreement, that is something you can also do on a bilateral level.

Have to reconsider.

How.

Can improve the attractiveness of the location what the CEO will now have to do because this steel falling off.

Vantage for the utility industry at least that's how it is perceived by many parties. Thank you.

Thank you that's helpful I'll pass that on to Mr. Chipset.

Well, let's see.

The Austin chalk well.

All it takes is always about what's feasible I think what's important now.

Yes.

If you take the first step which is now in sight.

Our next mandate, we do see perhaps in both sites that would be effect important stat.

Now whether or not in the second step.

We could still get another offset agreement is that something you can answer to EFI marks a level. It doesn't have to be part of a major pockets. You can also do a direct link between two countries.

Journalist (various, e.g. Christina Amann, Markus Kassler, Christoph Würmeier, etc.): It does not have to be part of a major package. You can also do it directly between two countries. This executive order on section 232, that is actually something that has been passed unilaterally. So perhaps we could renegotiate it bilaterally. But it would actually not include that into the big deal we are currently negotiating. I think it is unrealistic. But that is not a problem because these bilateral reductions of tariffs are much more important. As far as the U.S. is concerned, the investments that are to be made, and we already made those many, many years ago, we are actually 15 years ahead of everyone. In the past 30 years, we already saw more than 7 million or made more than 7 million vehicles in Spartanburg. We already invested $15 billion U.S. dollars there. So we more or less anticipated everything that was happening now.

This executive order on section two <unk>, that's actually something that's been.

And then Johnny naturally so perhaps we could renegotiate it.

<unk>.

I would actually not include that into the big deal that you're currently you're facing.

Negotiating I think it's unrealistic, but that's not a problem because.

These pilots for a reduction in the patents are much more important factor you assistance.

The investments.

That ought to be made.

So we already made us many many years ago. They were actually 15 days ahead of everyone.

Thank you, yes, we already invest so.

So more than $7 million or made more than $7 million.

Matt.

And we already invested $15 billion to install is there.

So we.

Anticipated everything that was happening now let us we knew it was going to happen.

Journalist (various, e.g. Christina Amann, Markus Kassler, Christoph Würmeier, etc.): Not that we knew it was going to happen, but this local for local approach, that is always the right thing to do. We did it in the U.S. We did it in China. We are also doing it in Europe. Just to give you the picture, at the same time, we are investing more than $2 billion, as we speak, in the U.S. At the same time, we are investing an even higher amount in Germany. Think of Elbach-Karskes. Think of the refurbishment of the plant in Munich or the entirely new plant in Hungary. The high F&E investment here in Europe. We really need to be careful is that we do not actually favor one nation over the other. Europe is the region that has the best network, and that is the business model we need to strengthen.

This lack of a local approach.

What was the right thing to do we did it in the U S. We did it in China. We're also doing it in Europe.

And just to.

I'll give you the picture at the same time, we're investing more than $2 billion as we state in the U S and at the same time.

We're investing in even higher amount in Germany, I think of Ilva has cash.

The attachment of the plan to Muni, while the entirely new plant in Hungary.

Hi, Anthony investment in Europe.

Now when we really need to be careful is that we do not say.

In fact, the one nation over the other now Europe is duration that has the best network and Thats the business model, we need to strengthen it would be entirely wrong.

Journalist (various, e.g. Christina Amann, Markus Kassler, Christoph Würmeier, etc.): It would be entirely wrong to believe that we can do more in the EU to strengthen that location so I am able to export more. That would be the wrong path because all of this is happening at the same time. On the level of technology, the world is entirely interconnected anyway. That is something you always need to distinguish. Trade with finished products follows its own laws. Obviously, and that is something we have been preparing for for many years, this will be increasingly localized. On the level of technology, the opposite is happening. Because of fast technological progress, the interlinking becomes stronger all the time. Look at the semiconductor industry. Look at battery technology. Globally, this will be stronger and stronger interlinked. This is actually the opposite of what you would assume. You just have to be clear about it.

And to believe that.

We can do more in due to strength in application, so I'm able to export more that would be the wrong path because all of this is happening at the same time and on the level of technology.

Well this is highly interconnected anyway.

That's something you always need to distinguish the two.

<unk> with finished product follows its own laws.

And obviously and that's something we've been preparing for many years this will be increasingly localized not on the level of technology the opposite is happening.

It comes off at Fox technological progress.

And to maintain it.

Stronger all the time look at the semiconductor industry look at battery technology.

Thirdly, this there'll be strong brand stronger into late so if this is actually the opposite can fluctuate as soon.

And you just have to be clear about it and we're trying to communicate.

Journalist (various, e.g. Christina Amann, Markus Kassler, Christoph Würmeier, etc.): We are trying to communicate this and tell politicians about this, that this is actually a large advantage that Europe is cooperating with the world and establishing links. We are not preventing investments abroad, but German companies are true global players. This is an advantage and not a disadvantage. It is these mechanisms you have to be aware of in order to strengthen Europe. Thank you. Next question, please. That is Christoph Würmeier from DPA. Please unmute yourself now. Good morning. A lot of my questions have already been asked. There are two things. Number one, tariffs. In the U.S., these have so far not been passed on to customers. Will you change that now? If I have understood what Mr. Mertl said earlier, and I just did a bit of math on my pocket calculator, in Q2, there would be roughly 600 million extra burden by tariffs.

Communicate.

And to tell politicians about this that this is actually a loss advantage.

Europe is cooperating with the world.

But she thinks theyre not preventing investments abroad adjourn companies actually plowed a plant. This is an advantage not at disadvantage.

And it's this make us mechanisms you have to be aware of in order to set in Europe.

Thank you next question please.

Yes, Christopher Maher from DTA.

Pete.

Yes.

Well good morning.

I'll ask my questions have already been asked.

I guess two things.

Number one.

<unk>.

In the U S.

So cannot be passed on to customers when you change that now.

It's understood what Mr. Matt discussed earlier.

But if not in my pocket calculator.

Q2 was that would be about $600 million extra burden by tariffs can.

Journalist (various, e.g. Christina Amann, Markus Kassler, Christoph Würmeier, etc.): Can you tell us how that is subdivided? How much of that is China and how much of that is the U.S.? Thank you, Mr. Würmeier. The question goes to Mr. Mertl. Hello, Mr. Würmeier. If we start with pricing, let's decouple from the cost. Pricing is multidimensional. It's not the same in China as it is in China, in the U.S., in Canada, or whatever. It's just the market. That's the first thing we need to take into account. Otherwise, all of any projects, the things we're planning and how and where we're acting, obviously, we do not talk about commercials publicly. Our competitors are also thinking about what they want to do, and we're thinking about this. This is not so much related to the tariff effect. This is something we do every day, every month when we launch new products. In every market, we consider things well.

Can you tell us how that is subdivided how much of that is China and how much of that.

Thank you Mr <unk>.

You guys since the market.

Hello, Mr demand.

Now, let me start with pricing.

That's decoupled from the cost Tri state patents as Marty mentioned, it's not the same in China as it is in China in the U S and Canada whatever it is just the market. So that's the first thing we need to take into account.

And otherwise.

The topics of things the planning and how and where they are asking obviously, we cannot talk about commercial property. Our competitiveness are also thinking about what they want to do.

About this and this is not so much related to tariff effects. This is something we do every day every month when we launch the product.

Every market, we consider things will discuss methods.

Journalist (various, e.g. Christina Amann, Markus Kassler, Christoph Würmeier, etc.): We spot our methods and we define our prices. Regarding the split of the tariffs, of course, different tariffs act in different countries. I'm not going to talk about that in detail now. So I'm placing the stand. Thank you, Walter. Next question, please. Next question comes from Stephen Warner from The Wall Street Journal. Please turn your microphone on.

Methods and we define our practice now regarding.

Split off the tariffs across different paths.

In different countries.

But I'm not going to talk about that in detail now.

Placed understand.

Next question please.

Next question comes from Steven warmer.

The Wall Street Journal.

The sentiment.

Sure.

Hi.

Journalist (Stephen Warner): I'm sorry to hark on about the business of tariffs. Thank you for taking my question. Just a couple of clarifications, if I may. I am struggling to reconcile the guidance for the full year, which you said 1.25 percentage points or based on the current analyst consensus, that would be about one and a half, a little over one and a half billion euros. It is quite a big difference from the one billion euros that you gave in your outlook in March. I appreciate a lot has changed, but also you have been helped as well as hindered by some of the changes. So can you just help us square what that one and a half billion number presumably is about, right? What has changed, I guess, since you last gave your tariff update?

Im sorry.

What about the business of tariffs. Thank you for taking my question, but just a bit of.

Okay.

Just a couple of clarifications if I may.

I'm struggling to reconcile the guidance.

<unk>.

For the full year, which you said one five percentage points. So based on the current analyst consensus that would be about one half a little over $1 5 billion euros, it's quite a big difference from.

The 1 billion euros.

Given your outlook.

March I appreciate.

Changed.

But also.

<unk> been helped as well as hindered by some of the changes so could you just help us square.

Look.

The world.

$1 5 billion number because it is about right.

What's changed since.

Since 2000 give your fuel.

The tariff update.

Journalist (Stephen Warner): Given in the context of your saying that everything has been fully anticipated and nothing has changed in your guidance, I am just trying to understand how that difference has come about. Secondly, does

In the context of Youre, saying that.

But everything has been fully anticipated and nothing has changed in your guidance I'm just trying to understand.

How the differences come about.

And then secondly.

Does your guidance current guidance include zero tariffs on the shipments of your vehicles from Spartan backed the EU.

Maximilian Schberl: Your current guidance include zero tariffs on the shipments of your vehicles from Spartanburg to the E.U.? There is a bit of ambiguity in the news reports around this, so I just wanted to know what you are factoring in. Thirdly, does that question of the E.U. tariff on U.S. exports or imports from the U.S., I should say, does that answer your question about export credits? You have talked a lot about getting some kind of offset arrangement with the U.S. Is that essentially, is that question of offsets basically answered by the question of what the E.U. tariff on shipments from the U.S. is, or are you thinking about that separately now? Thank you.

There's a bit of ambiguity in the.

Kind of news reports around this so I just wanted to know what you're factoring in.

And.

Thirdly does that.

Question of the EU tariff on U S.

Exports.

More imports from the U S. I should say does that answer your question about export credits.

You've talked a lot about.

Getting some kind of offsets arrangement with the U S.

Is that essentially is that question of offsets basically offset by the.

The question of what the EU tariff on shipments from the U S is or are you thinking about those separately now thank you.

Sensible.

Walter Mertl: Thank you for being in Germany. That's not the matter. Now, regarding guidance that we've given so far for the expected tariff impact, this was always only in respect of EBIT margin. Both in March and in May, I spoke about about one percentage point impact on the EBIT margin. The number in euros that you referred to, that didn't come from me. We're still talking about one percentage point in terms of EBIT margin. So much on the first question. Question two regarding the 0% tariff on EU imports. Yes, we're factoring that in in accordance with what I said before, starting August 1. However, in our P&L, let's not forget that the goods that we're importing on August 1 will not be sold right away and will not be posted in the P&L.

Hey, gentlemen, thanks Vanessa.

Now regarding guidance that was given so far.

For the expected tariff.

Impact just as always only in respect of EBIT margin.

May I start.

About about one percentage point impact on the EBIT margin number in euros, Okay to effectuate that didn't come through me, we're still talking about one percentage point in terms of EBIT margin. So much on the first question.

Setting tool regarding Europe.

Tax on <unk>.

Yes, we're factoring that in accordance with what I said before starting first of August however, in our P&L, let's not forget.

Good.

We're importing on first of all this is.

Solid trying to weigh in.

Posted in the P&L I'll still have pets.

Walter Mertl: I'll still have goods left, and it'll take some time, and there will be corresponding effects, but that's fully taken into account in our guidance. Now regarding the offset logic, we strongly advocated this, and Oliver Zipse mentioned it earlier, that we set up a credit scheme both in the U.S. as well as in Europe that gives us credit for units produced, and we can then use those credits. Unfortunately, that hasn't been adopted yet. That's one point in our list, something that we were hoping to be able to take into account. But that's out now because with the 1.25% impact, credit schemes for this year are not factored in. Regardless of that, we continue to work on this because we think it's the right thing to have a credit scheme both in the U.S. and in Europe.

Yes.

It'll take some time and there will be a funding effects, but thats sort of checking account in our guidance and now regarding the offsets.

We strongly advocated.

I mentioned it earlier.

Set up as credits in both in the U S Atlantic in Europe.

That gives us credit for.

For units produced and we can then use those credits unfortunately that hasnt been adopted yet that's one point and unless something.

And that they were hoping to be able to take into account.

Now because with the 125% impact.

Spread it scales for this year are not factored in.

This effect will continue to work on this because we think it's the right thing to have a credit scheme, both in U S and in Europe.

Walter Mertl: We would really like to implement such a scheme, and we'll continue to talk about it. Just, you know, to be quite clear about it, the offset is not factored into the current guidance for 2025. Thank you, Walter Mertl. The next question, please. Next question comes from Kanae Nagaki from Financial Times. Please turn on your microphone now.

To implement such as skin and we have continued to talk about it.

To be clear about it.

The offset is not.

Factored into the current guidance for 2020.

Thank you very much and that does the next question. Please.

Next question comes from.

Hi, Archie from financial times.

That's a new market.

Hello, Hi, Thank you for taking my question.

Oliver Zipse: Hello. Hi. Thank you for taking my question. I would like to ask a bit of a broader question. Until now, companies have obviously pointed to the evolving nature of the Trump administration's tariffs. Now that we do have a basic deal between the EU and the U.S., it does seem like these 15% tariffs are going to stay. So I just wanted to see your take on the fact that this will likely stay, obviously, through next year as well, and how this new reality is basically going to fundamentally change the car industry as a whole. That is, sorry, a big question for the first one. On the second one, I am sorry to go back to this tariff. You have just been walking through the various mitigation steps that you are going to be taking. I take the fact that you obviously have the benefit of exporting.

I'd like to ask a bit of a broader question.

Until now companies have always pointed to the evolving nature of.

Donald.

The Trump administration's terrace, but now that we do have a basic deal between the year on the U S. It does seem like the 15% tariffs are going to stay.

So I just wanted to see.

Your take on the fact that.

This will likely stay obviously through the next year as well.

How this new reality.

It's basically going to fundamentally change the car industry as a whole.

Sorry, a big question for the first one.

And then on the second one I'm sorry to go back to this tariff you've just been walking through the various mitigation.

Steps.

The steps that you are going to be taking it and then I take the fact that you obviously have the benefit of exporting but even then most of the rivals headset.

Oliver Zipse: Even then, most of the rivals have said that there are also the steel and aluminum costs that are not directly imposed on car makers but are obviously burdening the car industry through the suppliers. Therefore, many are expecting the tariff impact to actually increase towards the later, towards the end of the year, even despite the EU-U.S. trade deal. So I just wanted to clarify, is the differentiating factor for you the exports that allow you to buck, basically, the industry trend where everyone is warning that the impact will be bigger later this year? Thank you.

There is also the steel and aluminum costs that are not directly imposed on carmakers butter, obviously burdening the car industry is through the suppliers.

And that and and therefore, many are expecting the tariff impact actually.

Increased towards the later towards the end of the year, even despite the ear U S. China deal. So I just wanted to clarify.

The differentiating factor for you or is the exports that allows you to box basically the industry trend where everyone is warning that the impact will be bigger later this year.

Thank you.

Thank you for your question <unk>.

Walter Mertl: Thank you for your question. Oliver Zipse, please. If you understand BMW Group as a global group of companies, then before, we had an import-export balance into the U.S. and from the U.S., more or less. Just for the sake of argument, let's assume that was fairly balanced. We are importing the same as we are exporting. Then before, before the trade negotiations, we had a tariff, let's say, of 10% plus 2.5%, 10% going into the E.U. and 2.5% going into the U.S. Now, the total is 15%, 15% plus 0. From a global perspective, it is almost identical. The relationship changes, but in total, it is almost the same. What I want to say is I think this tariff discussion is way exaggerated, and it is a threat on the industry. What is much more important is the question, are the products attractive?

No.

Understand.

Both good companies.

Before.

We had an import export balance in key U S and from the U S.

Just the sake of argument, let's assume that was fairly bonds. So we're in 14.

Same as what <unk> and if for the for the Trade Association.

We had a tariff, let's say 10, plus two 5% 10 going into the EU in two five going into the U S.

Now the total 16.

15th of CLO.

So from a client if it's almost identical.

Sure the relationship changes Thats taken us almost the same what I want to say is I think it's.

Paris discussion.

In some ways saturated and also its effect on the industry, what's much more important.

Is the question.

Product attractive.

Walter Mertl: Are the products made in such a way that they create a contribution margin? Are they attractive enough so that customers will pay a good price for them? This is much more important than tariffs. Allow me to make that remark. Yes, we have got a new tariff system in place, which applies for now, but the effect on the BMW Group won't be that large because in total, the tariff is not much higher than it was before. What is important to understand for Europe is please do not go into, do not make that mistake of believing that by delimiting the trade relationships from other countries, you can be more resilient. I think that is a fallacy. Actually, you need to have global business models. You have to trade in all directions and be locally strongly integrated.

<unk> made in such a way that Ed.

Create a computation margin.

Attractive.

So that customers will pay a good price for them. This is much more important than tariffs.

So allow me to make that a mock well, yes, the new tariff system in place which applies for NASDAQ.

The effect on the individual won't be that large tickets in telco.

The tariff is not much higher than it was before.

What's important to understand.

Thanks go into that make that mistake beneath that you bet.

Bye.

And.

The limiting the trade relationships from other countries. It can be more resilient I think that is a policy.

Actually do you need to have clear business model.

You have to trade in all directions, and a low key strongly indicated these are the business models that what always survive NSS.

Walter Mertl: These are the business models that will always survive, and this is exactly the strategy of BMW Group. Back to Meta please. One thing I can add here is regarding the statement that you made that others have declared that in Q3, there will be higher impact, and we are not saying that. We have to take into account in the U.S. that the OEMs also have quite large inventories. Ours is the reach is less than 30 days. In the industry, on average, it is a huge spread, but the industry average is roughly 60 days. Many other OEMs have a lot more inventory or have more inventory in the U.S. That is different to us. They also imported cars into the U.S. in different manners. For that reason, their P&L still includes like legacy cars that are still being sold now without the tariffs.

Lastly, the strategy of BMW.

Second is in place.

One thing I can add here.

And regarding the statement that you made.

Others.

Have declared that in Q3, they'll be higher impact and we're not saying that well.

Take into account in the U S.

Hey, Betsy Oems also have.

<unk>.

But.

Large inventories ours.

Let me just less than 30 days now in E&P on average it's a huge stretch the industry average is roughly 60 days so many other Oems.

A lot more inventory more inventory in U S.

And that's different to us they all say.

Imported cars into the U S in different manners and for that reason that pain. Also includes legacy cars that are still being sold now without the tariffs and so in Q3.

Walter Mertl: In Q3, we will now have the cars sold on which those tariffs apply. That may well be that they actually say other things based on their particular business model, their inventory, and also their P&L effects than we at BMW because we have fewer cars in the yard locally. It does make a difference. Consistently, that is why the statements that are made by OEMs are just different. Yes, that was a very important clarification. Thank you. Next question, please. Christoph Gabuschinski from D-Welt. Turn your microphone on now, please. Good morning. I wanted to ask, could you comment on the current situation in China, and are you planning on changing your strategy or adjusting it? I will pass that question to Walter Mertl. Hello, Mr. Gabuschinski. In China, it is quite exciting.

Now half the cost salt on which dose Paris applaud.

That may well be that they actually.

The other things based on that particular business model their inventory and also their P&L effects and we at BMW.

Because we have fewer cars.

And the odd but likely it does make a difference consistently that's why the statements made.

Just different.

Yes.

Important clarification. Thank you next question please.

This is <unk> from Keybanc.

Microphone two.

Mooney.

Wanted to ask could you comment on the current situation in China.

Okay.

And we're planning on changing our strategy.

Okay I'll pass that question over to Mecca.

Hello, Mr Kucinski, well in China.

It's quite exciting and Julie.

Walter Mertl: End of June, as I said in my speech earlier, there were a few impulses by the government. They wanted to take greater care of how commissions are taken into account that we, as BMW, have been criticizing over the past few years that if Donald Banks paid far more than 5% commission to dealerships, we are not talking about net sales, but with an effect on net sales of the dealerships. This is something we made them aware of in June at the end of, and as a result, a couple of things happened beginning of July. We at BMW have always been positive about this month. One month, we had slightly increasing volumes, but of course, this had effects on the entire market. At the same time, the government also underlined that supplier payment schemes have to be taken into account.

I said in my speech.

And we are actually in process by the government to take better care of how clinicians are taken into account.

We have seen revenue.

Been criticized in the past to external banks.

Far more than 5% commission to dealerships are not talking about net sales.

With an effect on net sales of these dealerships and this is something we made them aware of in June at the end of <unk>.

As a result, a couple of things happens beginning of July we obtained W.

I've always been positive about this month.

We had slightly increasing volumes, but.

Of course, this had effects on the entire market.

At the same time.

The government also underlines that supplier payment schemes has to be taken into account in group pace within between 30 and.

Walter Mertl: BMW Group pays within between 30 and 60 days as per agreement, and other OEMs in China do this differently. So here, there might also be slight irritation. While we do not have that, all of that taken together may lead to some irritation. The 1st of July, the second week of July, and the third was better already. Ultimately, for us, for the BMW Group, and its stakeholders, we are seeing a slight increase in transaction prices in the first weeks of July. In the first weeks of July, but we will see how that goes once we have got the closing figures for July. Now, what may be different at BMW than with other OEMs is the following.

60 days after the repayments and other Oems in China due to separately.

So it might also be slightly mutation well, while we don't have that in all of that taken together may.

<unk> may lead to some cash in the second week of July and that the sector already.

For us for the BMW group and its stakeholders, we're seeing a slight increase in transaction prices.

First weeks of July.

The first weeks of July.

Well, we'll see how that goes once these capitalizing tickets for July.

Now what may be different at BMW and other Oems is the following as you know we are with <unk>.

Walter Mertl: As you know, we are restructuring our dealer network, and currently, the impact is mainly with the dealers that we have supported since November with respect to their criticality, and the dealership network will sort of be rearranged. We have made quite good progress, and by the end of the year, the process will have been completed. We have truly motivated dealers in place which will be able to sell their units. We are now in a phase of transition, but that makes it a little more difficult. This is why in the first six months, we saw a stronger impact in the year-on-year comparison.

Structuring our dealer network and currently the impact is mainly with the dealers.

We have support since November with respect to the criticality.

And Davis network that sort of <unk>.

We have made quite good progress yet in by the end of the process will have been completed.

75000 motivated dealers in place, which will be able to sell that.

Given that we're now in a phase of transition.

A little more difficult. This is flat in the first six months, we saw a stronger impact.

The year on year comparison.

And since we're making good progress and because existing groups of dealers.

Walter Mertl: Since we are making good progress and because existing groups of dealers are going to take over other groups of dealers and outlets, we are quite confident because they all believe in BMW, and they know that they are well invested, and they know that they will have a future with BMW. They will be able to grow. They will be able to make money, and we are very happy about that. Thank you, Walter Mertl. We have three questions left. Next question, please. Next question comes from Frank Folk from Automobilwoche. You have the floor. Hello, everyone. You mentioned the flexibility of production networks. If there are no import tariffs importing into, are you already considering relocating further models into the Spartanburg plant, for example? Then I have a question relating to the end-of-lease vehicles and the slower revenues obtained. What is the reason for that?

I'm going to take over other groups of status and how does that look.

We are quite confident because they all believe MW and they know that theyre, well invested and they know that they'll have a piece of the sand that they'll be able to grow may be able to make money and we are very happy about that.

Thank you Bank of America is three questions next next question. Please.

Next question comes from.

Cash flow from automobiles.

You'll have to floor.

Hello, everyone.

Yes.

You mentioned the flexibility of production network.

Now.

If there's no import tariff.

Importing into annual already considering relocating further model.

Into the Spartanburg plant for example.

And I have a question with 19 to the end of lease vehicles and slower revenues obtained what's the reason for that.

And then a question relating to China.

Walter Mertl: Then a question relating to China and the sales strategy. How are you currently acting there? There is a price competition going on. There is a fight. Are you going along with that, or would you tend to say, "No, we cannot make any more money on that"? What does it look like? Thank you, Mr. Folk. Mr. Zipse will begin regarding flexibility in production network, and then the other two questions will be answered by Mr. Mertl. Good morning, Mr. Folk. There will not be any relocations. The ranges of these cars are simply not large enough. As I said, the Spartanburg plant is working at full capacity. There is no room for further volumes, so permitted to say so. From the current perspective, all of that remains stable.

Any sense of the strategy.

How are you currently apps team there.

Price competition going on that defined going along with that or what you can say no the company.

So what does it look like.

Thank you Mr <unk>.

In particular, the gaming regarding expediting production network.

Two questions for Dan to Elisa method.

Good morning, Paul.

No there won't be any real.

Locations.

Now the ranges.

Has essentially launching now and as I said.

Starting about plant working at full capacity there is no room for volume commitments.

So.

And from the current perspective.

And.

All of that remains stable also the plant utilization in both markets Europe and the U S.

Walter Mertl: Also, the plant utilization and both markets, Europe and the U.S., each on their own, are highly attractive markets for BMW. The numbers actually speak for themselves. We have high growth rates in both markets, and this is independent of the plant location. Right, please? Hello. Let us start with the end-of-lease vehicles and the money we get for them. Every quarter, we reevaluate our entire portfolio in the entire world. We have residual value expectations toward the end of the contract, and we are relating that to the beginning of the contract. We are including all of the information into this calculation that we have, not just a general list, assuming current today's prices, but we are factoring in lists that we are predicting for the next 36 months, for example.

Each on their own are highly attractive market for BMW.

<unk> actually speak for themselves if the high growth rates in both markets.

Independent of the.

Okay.

So please.

Hey man.

Let's start with the end of used vehicles and the money we get from every quarter, we evaluate our entire portfolio in the entire world.

We have residual value expectations, what's the end of the contract.

Relating capped at the beginning of the contract and including all of the information into this calculation that we have not just general list assuming current today's costs.

That's actually a list that were predicting for the next 36 months for example, what kind of expected for the past two years.

Walter Mertl: What can be stated is that for the past two years, used car prices gradually normalized because we have had the best prices when there were hardly any new cars available because there was not enough material. This was in the years 2021 and 2022, and this is why used car prices increased strongly in that time. In 2023, Q3, these slowly decreased because we again had full availability. Regardless of that, regardless of the fact that prices are slowly decreasing again, we can establish that they are still higher than they were, for example, in 2018 or 2019. Accordingly, because we are reassessing every quarter, we can say that we still have, we still make income in the sale of end-of-lease vehicles. Not as much as last year, but it is still a positive contribution. This is exactly what that point is about.

And used car prices gradually normalized because you know we've had the best process, then goodbye hardly any new cars available because there wasn't enough materials or slip in the 'twenty. One 'twenty two inches by used car prices increased strongly in that time in 2023 third quarter Keith.

<unk> decreased because we again had full availability, but regardless of that because of the fact that prices are slowly decreasing again, we can.

But they are still higher than they were for example in 2018 or 2019.

And accordingly the costs.

We are reassessing every quarter.

We can state that they still have.

And we still make income in the sale of <unk>. Please speak up not as much as last year, but it's still a positive contribution and this is exactly what that point is about now.

Walter Mertl: Now, China, you are asking whether we are entering the full price fight. In China, last year, we had a major discussion, Q2 and Q3, when a lot of things happened. Also, these commissions that I referred to earlier, they increased to more than 10%, a fact which we had criticized. This has now led to a turnaround. Of course, the market is quite dynamic. I would like to point to our forecast. In March, we said that we will be on the level of the second half here of 2024. I can tell you our net revenues, if I compare those with the forecasted second half of the year 2024, we are actually slightly in the positive compared to where we were second half of the year 2024. So our plan is working, and the future will show the rest. Thank you, Walter.

China.

You are asking whether we're entering the full price side well in China last year, we had a major discussion in the second and third quarter and a lot of things happened also the submissions that I referred to earlier.

They increased to more than 10% since we have criticized now. This has now led to a turnaround of course the market is quite dynamic, but I'd like to point to our forecast in March is that fair.

<unk>.

We'll be on the level of the second half of 2024 and I can tell you our net.

Revenues, if I compare those with the forecast the.

Second half of the year 2024, we're actually slightly in the positive compared to where we were second half of the year 2024.

Our plan is working.

And the future will show you the rest.

Thanks for that our next question please.

Walter Mertl: Next question, please. That is Angela Meyer from the Market Insenses. Please turn your microphone on. Good morning. I have got three very brief questions. I wanted to know, can you say anything on the dividend yet? The forecast is that, or analysts forecast that the dividend will be lower for €4 compared to the €4.30 from the previous year. Hence my question. Do you have a target? Do you want to keep the dividend stable, or how do you see this? Second question. In China, the limit for luxury tax was lowered. What's the impact for BMW? Could you tell us how many vehicles roughly could be affected by this? Then, third question I'd like to ask, the 0% tariffs in the European Union, does that take off some burden, and could you quantify that in base percentage points? Thank you, Ms. Meyer.

That's under my App.

The market in <unk>.

Please turn the microphone on.

Good morning, I've got three very brief questions.

I'd like to know can you say anything on the dividend kit.

The forecast is that.

Forecast that dividend will be electric.

Compared to the full 30 from the previous year. Hence my question do you have.

The target you want to keep the dividend stable or how do you see this.

Second question.

In China, the limit for luxury taxes.

What's the impact for BMW could you tell us how many of equal roughly could be affected by this and then the question.

I'd like to ask.

Is there a percentage.

And the European Union.

Does that take off somewhat and could you quantify or qualify that.

The percentage point.

Thank you Ms Meyer.

All three questions will be answered by bank of America.

Walter Mertl: All three questions will be answered by Walter Mertl. Hello, Ms. Meyer. The amount of the dividend, we'll tell you once we know. That'll be in March 2026 at the Balance Sheet Press Conference. That's where you'll get the information regarding China and the luxury tax that was lowered. I wanted to correct you. The luxury tax is there, but the base level as of which it applies, that base level was lowered to 900,000 renminbi. The impact for us is less than 1% of the volume. Regarding relieving a burden because of 0% tariffs for EU imports, I mentioned this earlier when I was asked whether I could break down all of the tariff effects individually. That's something I wasn't going to do, so I won't do that now.

Hello, Matt.

The amount of.

Dividend will toggle once we know that it would be in March 2026 at the balance sheet Press conference.

And that's where you'll get to see information regarding China and the luxury tax that was Nellix I wanted to correct gene in the luxury tax.

Is there a base level as of which it implies that base level was lowered to 900000 Zen envy now the impact.

Perhaps is less than 1% of the volume.

Regarding the needing a burden because of payroll at Paris for your inputs I mentioned this earlier when I was asked whether I could break down all of the FX individually, that's something I wasn't going to just I want to do that now so just no that's still five years less for imports.

Walter Mertl: Just know there's still five years left for EU imports, and they don't have a P&L effect of five months, but less. Of course, there will be an effect, and we're happy that people followed us in that respect. Thank you, Walter Mertl. Something fun, the last question, Lutz Meyer. We had Angela Meyer first, and now we have Lutz Meyer. The last question, please. Lutz Meyer from Capital. Good morning. Yes, sorry. It's just a comment I had to make. I apologize. There could be more people by that name. Anyway, you have the floor. Now for something completely different. No tariffs. On your perspective, you had some positive news on EV sales, and I would like some more details. First of all, are you this year compliant with the EU regulation, and how about the next years to come?

And they didn't have.

A second pipeline, but less that of course, there will be an effect and we're happy.

And that people followed after that.

Think about the matter.

Now there's something from the last question just smile.

We have anchored on that.

And now we have.

The last question, please let's Meyer from hepatitis.

Good morning.

And that.

Sorry, just to comment I had to make.

Hi, Josh.

So that could be multi colored by that name anyway.

Do you have the floor.

Now for something completely different no Paris.

Effective.

You had.

Some positive news on the bed sales.

A more detailed festival.

Higher this year compliance with EU regulation and how about next.

Our next years to come.

And are you keeping an eye on what the regulation is joining him.

Walter Mertl: Are you keeping an eye on what the regulation is doing here, and what's the demand on the market? In the EU, could you say that, I mean, last year, customers were quite reserved. Is that over now? Is demand now increasing? If it is, is it also increasing outside of Europe? Is the margin increasing outside of Europe? If you're now selling more EVs, does that dilute your margin, or is the opposite the case? The third question, also on EVs, but now in respect to China, there is a concern that in China, luxury and EV doesn't really go together and will not work in the long run. So what's your take on this? What's your experience? Thank you, Mr. Meyer, for those three questions. They will be answered by Mr. Zipse. Good morning, Mr. Meyer. I would like to answer your questions step by step.

What's the demand in the market.

Yes.

Could you say that.

I mean last year customers are quite pleased is that open now.

Demand is now increasing and if it is.

It is also increasing outside of Europe is the margin increasing outside of Europe. As you are now selling more beds.

Does that dilute your margin or is the opposite okay.

And the third question I'll say on that.

But now with <unk>.

China.

That is a concern that in China.

Wow.

You bet.

It doesn't really go together.

Development work in the long run so what's your take on this fluctuates gains.

Thank you Mr. <unk> for that question.

Will be answered by Mr chipset with morning to Miami.

I'd like to answer your questions setbacks that festival.

Walter Mertl: First of all, do we reach our targets? Yes, we are sufficiently confident about this. Last year, we reached them anyway. This year, next year, I think we will also reach our goals in terms of the current regulation in the E.U. They have all been known for many years. Even if for 2025, the goals are stricter, we are growing with our electric vehicles, so we are quite confident that we can reach those goals. We still believe there could be a better regime, a better method going forward to 2030 and 2035 to do this made efficiently, but then also to improve the effectiveness of CO2 regulations. You know what we are saying. We need a lifecycle assessment.

Reach out targets, yes, sufficiency confident about this.

Last year, we reached them anyway. This year next year.

I think we'd also reached our goals in terms of the current regulation. Indeed, do therefore been known for many years.

It is for 2025 and the gold sector. We are grounded on our bets. So we're quite confident that we can reach those goals.

We still believe.

That could be a better <unk>, a better message going forward to 2013 2035.

To do this may sufficiency, but then also to.

Improved effectiveness.

Two if I could I think you know, what we're saying we need a lifecycle assessment.

Walter Mertl: Not just look at what happens in the car, but also consider where does the power come from, what happens in the value chain, what happens with the suppliers, what happens when the cars are recycled. Sometimes it is a little difficult to understand that we are saying, "Yeah, yeah, we are staying within all of the limits, but looking into the future, we are actually in favor of a more intelligent approach to us." That is no contradiction, by the way, that we are doing that because everything we do cannot be measured in quarters, but in years or even decades. So what happened in the first six months? Electric vehicle sales could be increased globally to more than 220,000 units. We have never had that many before, and that should actually answer your question. Is there a market for these? Of course, there is.

Look at what happens in the car, but also consider where that steam power come from what happens in Nevada chain, what happens the suppliers what happens when the costs are recycled.

Well, sometimes it's a little difficult to understand yes, yes, we are saying, but then all of the limits thoughts looking into the future. We're actually in favor of a more intelligent approach to offset slight contradiction and by the way that we're doing that because everything we do.

Cannot be measured in quarters or in DSO.

Or even decades.

And what happened in the first six months.

Sales could be increased somebody to more than 220000 units is never ending.

Not many before him exactly answer your question is there a market for these of course, there otherwise they wouldn't be selling so many costs.

Walter Mertl: Otherwise, we would not be selling so many cars. They are highly attractive. Now with NEUE KLASSE, we are still going one level up with an increased performance in almost all sizes. So we do believe in 2026, 2027, 2028, we will be on a very good track. You will see with the NEUE KLASSE, the attractiveness of our product portfolio is so high that we will see a substantial increase in our values. Which brings me to your question about China. Whether in a specific market something works better or worse, it is precisely for that reason that our approach is neutral in the respect of technology. In Europe, there are different approaches as well, by the way. There is a huge difference between Denmark, Belgium, Norway, as compared to Spain and Italy. With our approach, we are just responding to that.

Highly attractive and now with <unk>.

We're still going one level up with an increased performance in almost all sizes. So we do believe in 2026 27 28.

Maybe on a very good track and you will see with the nice assets the attractiveness of our product portfolio is so high.

But we will see a substantial increase in our volumes.

Which brings me to.

The question about China.

Now quite a any specific market something works better or worse.

It's precisely for that reason that our approach is neutral in your respective technology in Europe is different approaches as well by the way that I think its typically in Denmark, Belgium, Norway, Spain and Italy.

With our approach.

We just responding to that.

Walter Mertl: We just change the product mix in such a way that it works there. This is in Europe the same as it is in China. The observation you made, that is quite right, but it is not a problem, really, because we are able to react to this. What I said earlier about NEUE KLASSE, of course, we will also launch it in China. It is a global product offering. We will create trust. Customers, that all electric offering can be very attractive because of the electric drivetrain, but not only because of that. These are all in all very modern vehicles, physical capabilities, completely new design. You will experience, we are not relaxed, but we are confident that we are able to respond well to any market development. How about the margin? Do more electric vehicles dilute your margin? Walter Mertl. I could take that question.

We just changed the product mix in such a way that it works there and this is in Europe. The same as it is in China.

And the explanation you may well, that's quite right but.

It's not a probability cost we're able to react to this and what I said.

About 90 plus it.

Of course, we will also launch it in China, it's close a product offering.

Davita creates trust not customers.

All electric often can be very attractive because the electric drivetrain, but not only because of that he is all in a very modern vehicles.

Digital capabilities continued to sign.

You will experience.

We're not relax.

Thanks again.

But we are able to respond well to any market development.

How about the margin.

Two more back starting with your margin.

North America.

Well I can take that question.

Walter Mertl: Do you know that not just because of design and attractiveness of the product of NEUE KLASSE? That is not the only reason we are looking forward to this, but I am also looking forward to its profitability with Gen 6 and a battery alone. Depending on which battery used, we will have savings of 40% to 50% in manufacturing costs compared to our current Gen 5 battery. I am really looking forward to that. I am also looking forward to that also in terms of the electric vehicles. All right. Thank you, Lutz Meyer, for the questions. Thanks to the colleagues. Thanks for your questions. We are now ending our telephone conference. Thanks for participating. Goodbye and service from Munich.

That's not just because of design and attractiveness of the product. That's my adjusted it that's not the only reason we're looking forward to this but I'm also looking forward to its profitability with Gen. Six the battery alone.

Depending on the specialty use we'll have savings of 40% to 50% and manufacturing costs compared to our current gen fastback shape.

So I'm really looking forward to that so I'm also looking forward to that also in terms of the bed.

Alright. Thank you my questions. Thanks to the colleagues. Thanks for your questions. We are now ending our telephone conference. Thanks for participating goodbye and established from Munich.

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For the year.

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Thanks.

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