Q2 2026 Bayerische Motoren Werke AG Pre-Close Earnings Call

July 10, 2026

[Company Representative] (BMW): vehicles to customers. This represents a 4.9% year-on-year decline compared to the prior year quarter, mainly reflecting continued market weakness in China and parts of the Asia Pacific region. At the same time, sales growth in Europe and the United States partially offset these headwinds. For the first six months of 2026, BMW Group retail sales totaled 1.2 million vehicles, down 4.2% year-on-year. Turning to the performance of our brands, the BMW brand delivered 509,000 vehicles in Q2, representing a decline of 7.7% year-on-year. For H1, BMW brand retail sales reached 1 million units, representing a decline of 6.2% year-on-year. MINI, on the other hand, delivered a strong performance in Q2, with retail sales of 81,000 units and growth of 17.1% year-on-year, marking the sixth consecutive quarter of sales growth.

[Company Representative] (BMW): Vehicles to customers. This represents a 4.9% year-on-year decline compared to the prior year quarter, mainly reflecting continued market weakness in China and parts of the Asia Pacific region. At the same time, sales growth in Europe and the United States partially offset these headwinds. For the first six months of 2026, BMW Group retail sales totaled 1.2 million vehicles, down 4.2% year-on-year. Turning to the performance of our brands, the BMW brand delivered 509,000 vehicles in Q2, representing a decline of 7.7% year-on-year. For H1, BMW brand retail sales reached 1 million units, representing a decline of 6.2% year-on-year. MINI, on the other hand, delivered a strong performance in Q2, with retail sales of 81,000 units and growth of 17.1% year-on-year, marking the sixth consecutive quarter of sales growth.

Speaker #1: Vehicles to customers.

Speaker #2: This represents a 4.9% year-on-year decline compared to the prior-year quarter, mainly reflecting continued market weakness in China and parts of the Asia-Pacific region.

Speaker #2: At the same time, sales growth in Europe and the United States partially offset these headwinds. For the first six months of 2026, BMW Group retail sales totaled 1.2 million vehicles, down 4.2% year-on-year.

Speaker #2: Turning to the performance of our brands, the BMW brand delivered 509,000 vehicles in the second quarter, representing a decline of 7.7% year-on-year. For the first half of the year, BMW brand retail sales reached 1 million units, representing a decline of 6.2% year-on-year.

Speaker #2: Many, on the other hand, delivered a strong performance in the second quarter, with retail sales of 81,000 units and growth of 17.1% year-on-year, marking the sixth consecutive quarter of sales growth.

Speaker #2: For the first half of 2026, MINI delivered 150,000 vehicles to customers, up 11.7% versus the prior year period. Fully electric models remained a key contributor to the brand's growth.

[Company Representative] (BMW): For H1 2026, MINI delivered 150,000 vehicles to customers, up 11.7% versus the prior year period. Fully electric models remained a key contributor to the brand's growth. Now turning to BEV. BEV sales grew in Q2. The new BMW iX3 played a key role following its European market launch in March, which only allowed for limited impact in Q1 and delivered solid numbers in April through June. MINI continued to make a key contribution with double-digit growth in Europe and Asia Pacific. In Q2, the BMW Group delivered 117,000 battery electric vehicles to customers, accounting for 19.8% of total group sales in the quarter. Including plug-in hybrid electric vehicles, electrified vehicles accounted for 27.6% of total group sales. In the first six months of 2026, we delivered 204,000 battery electric vehicles globally, representing 17.7% of total group sales.

Speaker #2: Now turning to Beth, Beth's sales grew in the second quarter. The new BMW iX3 played a key role, following its European market launch in March.

Speaker #2: This only allowed for a limited impact in Q1 and delivered solid numbers in April through June. MINI continued to make a key contribution with double-digit growth in Europe and Asia-Pacific.

Speaker #2: In Q2, the BMW Group delivered 117,000 battery electric vehicles to customers, accounting for 19.8% of total Group sales in the quarter. Including plug-in hybrid electric vehicles, electrified vehicles accounted for 27.6% of total Group sales.

Speaker #2: In the first six months of 2026, we delivered 204,000 battery electric vehicles globally, representing 17.7% of total Group sales. Including plug-in hybrid electric vehicles, electric vehicles accounted for 25.5% of Group deliveries in the first half of the year.

[Company Representative] (BMW): Including plug-in hybrid electric vehicles, electric vehicles accounted for 25.5% of group deliveries in H1. Supported by our broad and competitive portfolio of battery electric and plug-in hybrid vehicles, we remain confident in our ability to meet the European CO2 regulatory requirements for 2026 without pooling. Demand for the Neue Klasse continues to develop positively. The order intake for the BMW iX3, our first Neue Klasse model, is well on track to reach 100,000 units since the start of sales in September 2025. As a result, we have pulled forward the second shift in plant Debrecen and are already working on adding the third. In addition, the BMW i3, the second Neue Klasse model, has also seen strong demand immediately after the start of the launch edition in June, with regular ordering available at the end of September.

Speaker #2: Supported by our broad and competitive portfolio of battery electric and plug-in hybrid vehicles, we remain confident in our ability to meet the European CO₂ regulatory requirements for 2026 without pooling.

Speaker #2: Demand for the Neue Klasse continues to develop positively. The order intake for the BMW iX3, our first Neue Klasse model, is well on track to reach 100,000 units since the start of sales in September 2025.

Speaker #2: As a result, we have pulled forward the second shift at Plant Debrecen, and are already working on adding the third. In addition, the BMW i3, the second Neue Klasse model, has also seen strong demand immediately after the start of the launch edition in June, with regular ordering available at the end of September.

Speaker #2: Both the iX3 and the i3 mark a promising outlook once available in all regions. Product momentum is further supported by the new BMW 7 Series and the all-new X5, which received very positive feedback after its world premiere in Spartanburg last week.

[Company Representative] (BMW): Both the iX3 and the i3 mark a promising outlook once available in all regions. Product momentum is further supported by the new BMW 7 Series and the all-new BMW X5, which received very positive feedback after its world premiere in Spartanburg last week. The BMW X5 will bring Neue Klasse technologies in five powertrain variants to meet diverse customer needs worldwide. It marks a significant step in establishing Neue Klasse more broadly in the product portfolio, a deliberate product cadence step to drive scale early alongside our other globally popular BMW X3 and BMW 3 Series cars. Let me now walk you through the regional developments during the quarter. Europe remained one of the key growth drivers for the BMW Group in Q2. Group retail sales in Europe increased by 7.6% year-on-year to 260,000 units.

Speaker #2: The X5 will bring Neue Klasse technologies in five powertrain variants to meet diverse customer needs worldwide. It marks a significant step in establishing Neue Klasse more broadly in the product portfolio, a deliberate product cadence step to drive scale early alongside our other globally popular X3 and 3 Series cars.

Speaker #2: Let me now walk you through the regional developments during the quarter. Europe remained one of the key growth drivers for the BMW Group in the second quarter.

Speaker #2: Group retail sales in Europe increased by 7.6% year-on-year to 260,000 units. For the first half of 2026, deliveries reached 497,000 vehicles, representing growth of 5.4% versus the previous year.

[Company Representative] (BMW): For H1 2026, deliveries reached 497,000 vehicles, representing growth of 5.4% versus the previous year. Europe remained the key driver of the BMW Group's electric vehicle growth. Supported by the launch of the new BMW iX3 and the continued popularity of the MINI BEV products, battery electric vehicle demand grew by 37.9% across the region. Beyond electrification, order intake across the remaining portfolio continues to be strong and extends well into Q4. The United States remains an important contributor to the Group's performance, as highlighted at our event in Spartanburg last week. Q2 2026 was no exception. BMW Group retail sales increased by 11.9% year on year to 111,000 units in Q2. For the first six months, deliveries totaled 201,000 vehicles, up 3.9% versus the prior year period. Strong demand for vehicles with internal combustion engines more than compensated for lower battery electric vehicle deliveries.

Speaker #2: Europe remained the key driver of the BMW Group's electric vehicle growth. Supported by the launch of the new BMW iX3 and the continued popularity of the MINI BEV products, battery electric vehicle demand grew by 37.9% across the region.

Speaker #2: Beyond electrification, order intake across the remaining portfolio continues to be strong and extends well into the fourth quarter. The United States remains an important contributor to the group's performance, as highlighted at our event in Spartanburg last week.

Speaker #2: Q2 2026 was no exception. BMW Group retail sales increased by 11.9% year-on-year, to 111,000 units in Q2. For the first 6 months, deliveries totaled 201,000 vehicles, up 3.9% versus the prior-year period.

Speaker #2: Strong demand for vehicles with internal combustion engines more than compensated for lower battery electric vehicle deliveries. Supported by strong customer demand, an attractive product mix, and improved product availability, the BMW brand continued to outperform the overall U.S. market.

[Company Representative] (BMW): Supported by strong customer demand, an attractive product mix, and improved product availability, the BMW brand continued to outperform the overall US market. In China, the overall market environment remained challenging during Q2. BMW Group retail sales amounted to 118,000 vehicles, representing a year-on-year change of -30.2%. For H1 2026, deliveries totaled 262,000 units, down 20.4% versus the prior year period. As communicated in our recent guidance update, softer market developments and continued competitive intensity weighed on sales performance in the market. In this environment, we continue to balance volume, pricing, and profitability. BMW Group retail sales in the Asia Pacific region amounted to 78,000 units, down 10.9% year on year. For H1 of the year, deliveries reached 153,000 vehicles, representing a change of 9.7% versus the prior year period.

Speaker #2: In China, the overall market environment remained challenging during the second quarter. BMW Group retail sales amounted to 118,000 vehicles, representing a year-on-year change of minus 30.2%.

Speaker #2: For the first half of 2026, deliveries totaled 262,000 units, down 20.4% versus the prior-year period. As communicated in our recent guidance update, softer market developments and continued competitive intensity weighed on sales performance in the market.

Speaker #2: In this environment, we continued to balance volume, pricing, and profitability. BMW Group retail sales in the Asia-Pacific region amounted to 78,000 units, down 10.9% year-on-year.

Speaker #2: For the first half of the year, deliveries reached 153,000 vehicles, representing a change of 9.7% versus the prior-year period. As reflected in our updated guidance, multiple markets in the region are suffering from a spillover effect from the market situation in China, as well as the Middle East conflict lasting beyond previous assumptions.

[Company Representative] (BMW): As reflected in our updated guidance, multiple markets in the region are suffering from a spillover effect from the market situation in China, as well as the Middle East conflict lasting beyond previous assumptions. This has resulted in a decline in the overall region. Now moving on to our financials, and here, starting with the Automotive segment. I imagine that most of you joined our call three weeks ago, where we shared the adjustments to our outlook for the 2026 financial year. As highlighted then, the effects outlined in the full year adjustment will also contribute to a significant decline in earnings and free cash flow in Q2 versus previous year. As always, at this stage, we are in the process of closing our books and therefore, no final figures are available at this point in time.

Speaker #2: This has resulted in a decline in the overall region. And now, moving on to our financials and, here, starting with the automotive segment. I imagine that most of you joined our call three weeks ago, where we shared the adjustment to our outlook for the 2026 financial year.

Speaker #2: As highlighted, the effects outlined in the full-year adjustment will also contribute to a significant decline in earnings and free cash flow in the second quarter versus the previous year.

Speaker #2: As always at this stage, we are in the process of closing our books, and therefore, no final figures are available at this point in time.

Speaker #2: To the extent possible today, let us now have a preliminary look at the most relevant elements of our Q2 financials. We expect the level of Auto segment revenue to be impacted by the unit sales decline in Q2.

[Company Representative] (BMW): To the extent possible today, let us now have a preliminary look at the most relevant elements of our Q2 financials. We expect the level of Automotive segment revenue to be impacted by the unit sales decline in Q2. As described just before, retail sales have declined slightly, and wholesales, which determine revenue, decreased by a similar rate. Pricing was negatively impacted by the persistent competitive pressure, especially in the Chinese market and certain Asia Pacific markets, as well as by a subdued consumer sentiment in many markets around the world. The latter is driven notably by the ongoing conflict in the Middle East and elevated fuel prices. Furthermore, currency translation effects from a stronger euro are expected to weigh on revenue development. The consequences of negative volume and pricing will unquestionably trickle down to EBIT and lead to a meaningful gross headwind for the volume mix price bucket.

Speaker #2: As described just before, retail sales have declined slightly, and wholesales, which determine revenue, decreased by a similar rate. Pricing was negatively impacted by persistent competitive pressure, especially in the Chinese market and certain Asia-Pacific markets.

Speaker #2: As well as by subdued consumer sentiment in many markets around the world. The latter is driven notably by the ongoing conflict in the Middle East and elevated fuel prices.

Speaker #2: Furthermore, currency translation effects from a stronger euro are expected to weigh on revenue development. The consequences of negative volume and pricing will unquestionably trickle down to EBIT and lead to a meaningful gross headwind for the volume/mix/price bucket.

Speaker #2: A negative net effect from raw material and currency transaction will also weigh on Q2 earnings, in line with our expectation of an FX skew towards H1.

[Company Representative] (BMW): A negative net effect from raw material and currency transaction will also weigh on Q2 earnings, in line with our expectation of an FX skew towards H1. Moreover, the anticipated increase of depreciation in both categories, R&D and property, plant, and equipment, will burden EBIT versus the previous year. In line with our full-year outlook, depreciation will continue to be an earnings burden in the consecutive quarters of 2026. At this point, let me revert to our earnings adjustment from 16 June and reiterate that all upfront costs in connection with the announced measures to intensify and accelerate structure and efficiency measures are expected to weigh on earnings in H2 2026 and the associated free cash flow impact only applying from 2027 onwards. Hence, this can be ignored for your Q2 estimations. We also expect some positive year-over-year effects.

Speaker #2: Moreover, the anticipated increase in depreciation in both categories, R&D and property, plant, and equipment, will burden EBIT versus the previous year. In line with our full-year outlook, depreciation will continue to be an earnings burden in the consecutive quarters of 2026.

Speaker #2: At this point, let me revert to our earnings adjustment from June 16 and reiterate that all upfront costs in connection with the announced measures to intensify and accelerate structured and efficient measures are expected to weigh on earnings in the second half of 2026, with the associated free cash flow impact only applying from 2027 onwards.

Speaker #2: Hence, this can be ignored for your Q2 estimations. We also expect some positive year-over-year effects, for example from our ongoing efforts to reduce operating costs, and a tariff relief compared to the sizable burden accounted for in Q2 2025.

[Company Representative] (BMW): For example, from our ongoing efforts to reduce operating costs and a tariff relief compared to the sizable burden accounted for in Q2 2025. Nevertheless, all the expected positives will only partly compensate for the cumulative earnings burden based on our assumptions. As a result, auto EBIT in Q2 is expected to be significantly below the EUR 1.6 billion we had on record one year ago. The associated EBIT margin in Q2 is expected to be in line with the full-year guidance updated on 16 June. Let's now turn to some preliminary considerations regarding the Q2 cash development. First and foremost, the free cash flow potential in the automotive segment is obviously limited by many of the factors impacting EBIT that we have just covered. Additionally, Q2 working capital will likely be affected by an inventory increase, and the net effect of depreciation and investment continues to make a positive contribution.

Speaker #2: Nevertheless, all the expected positives will only partly compensate for the cumulative earnings burden based on our assumptions. As a result, auto EBIT in Q2 is expected to be significantly below the €1.6 billion we had on record one year ago.

Speaker #2: The associated EBIT margin in Q2 is expected to be in line with the full-year guidance updated on June 16. Let's now turn to some preliminary considerations regarding the Q2 cash development.

[Company Representative] (BMW): Let's now turn to some preliminary considerations regarding the Q2 cash development. First and foremost, the free cash flow potential in the automotive segment is obviously limited by many of the factors impacting EBIT that we have just covered. Additionally, Q2 working capital will likely be affected by an inventory increase, and the net effect of depreciation and investment continues to make a positive contribution.

Speaker #2: First and foremost, the free cash flow potential in the automotive segment is obviously limited by many of the factors impacting EBIT that we have just covered.

Speaker #2: Additionally, Q2 working capital will likely be affected by an inventory increase. The net effect of depreciation and investment continues to make a positive contribution.

Speaker #2: Taking these effects into account, we expect a positive free cash flow in Q2, very likely below the level of Q1. Switching now to Financial Services, new business development in the segment remained robust in Q2.

[Company Representative] (BMW): Taking these effects into account, we expect a positive free cash flow in Q2, very likely below the level of Q1. Switching now to financial services. New business development in the segment remained robust in Q2. The global risk situation remains within our expectations. We expect a strong sequential result improvement as Q1 2026 was materially impacted by additional provisions in connection with a compensation scheme for motor finance customers in the UK. For other entities and consolidation combined, we expect a positive earnings contribution in Q2 2026. Overall, based on the factors outlined above, the group EBT in Q2 is expected to be significantly below last year's level. Our full-year guidance for group earnings before tax also expect a decline of at least -15% based on the EUR 10.2 billion from 2025.

Speaker #2: The global risk situation remains within our expectations. We expect a strong sequential result improvement, as Q1 2026 was materially impacted by additional provisions in connection with the compensation scheme for motor finance customers in the UK.

Speaker #2: For Other Entities and Consolidation combined, we expect a positive earnings contribution in Q2 2026. Overall, based on the factors outlined above, the Group EBT in Q2 is expected to be significantly below last year's level. Our full-year guidance for Group earnings before tax also expects a decline of at least minus 15%, based on the €10.2 billion from 2025.

Speaker #2: As announced last week, the second tranche of the third share buyback program, with a volume of €625 million, was successfully completed on June 26.

[Company Representative] (BMW): As announced last week, the second tranche of the third share buyback program, with a volume of EUR 625 million, was successfully completed on 26 June. As such, it concluded 2 months ahead of the original schedule. The third tranche, also with a volume of EUR 625 million, began on 1 July already. It is expected to be finalized no later than 30 November, which represents a notable acceleration. Over the 2 tranches, stretching from 1 January to 30 November, we will have spent EUR 1.25 billion. With that, we will have completed the entire current EUR 2 billion program a full 5 months earlier than the originally scheduled date of end of April 2027. This underscores our commitment to shareholder returns in spite of the adjustment to our guidance. More details on our quarterly results will be released on 30 July.

Speaker #2: As such, it concluded two months ahead of the original schedule. The third tranche, also with a volume of €625 million, began on July 1 already.

Speaker #2: It is expected to be finalized no later than November 30, which represents a notable acceleration. Over the two tranches, stretching from January 1 to November 30, we will have spent €1.25 billion.

Speaker #2: And with that, we will have completed the entire current €2 billion program a full five months earlier than the originally scheduled date of end of April 2027.

Speaker #2: This underscores our commitment to shareholder returns, in spite of the adjustment to our guidance. More details on our quarterly results will be released on July 30.

Speaker #2: This brings me to the end of my remarks, and I'm very happy to take your questions now. Before that, I will hand over to Adam to start the process.

[Company Representative] (BMW): This brings me to the end of my remarks, I'm very happy to take your questions now. Before that, I hand over to Adam to start the process. Thank you, Adam.

Speaker #2: Thank you, Adam.

Speaker #1: Thanks, Stefan. Before we jump in, a couple of technical instructions for us to get through the Q&A. If you have a question, please raise your hand using the Raise Hand function in Microsoft Teams.

Operator: Thanks, Stefan. Before we jump in, a couple of technical instructions for us to get through the Q&A. If you have a question, please raise your hand using the raise hand function in Microsoft Teams, I will call you up in the order that the hands have been raised. To ensure everybody gets a chance to ask questions, please limit yourself to a maximum of two questions. Once you unmute your line, there will be a pop-up window asking you to provide your consent that you are happy for your microphone to be activated during the recording of the meeting. Click yes, you can ask your question. When we have finished with your question, please lower your hand again. That is it for the technical side of things. With that, I think we can jump straight in.

Speaker #1: And then I will call you up in the order that the hands have been raised. To ensure everybody gets a chance to ask questions, please limit yourself to a maximum of two questions.

Speaker #1: Once you unmute your line, there will be a pop-up window asking you to provide your consent that you are happy for your microphone to be activated during the recording.

Speaker #1: Of the meeting, click 'Yes' and then you can ask your question. When we've finished with your question, please lower your hand again.

Speaker #1: That's it for the technical side of things. And with that, I think we can jump straight in. We have a number of people on the line already.

Speaker #1: First up is Horst Schneider at Bank of America. Horst, over to you. We can hear you now, Horst—off you go.

Operator: We have a number of people on the line already. First up is Horst Schneider at Bank of America. Horst, over to you.

Speaker #3: That's great. Hello, and thanks for taking my questions. I tried to constrain myself to two questions. The first one would be on China, and on the profitability in Q2—if you can give any indication of that, how it has developed.

Horst Schneider: Can you hear me now?

Operator: We can hear you now, Horst. Off you go.

Horst Schneider: That's great. Hello. Thanks for taking my questions. I try to constrain myself to the two questions. First one would be on China and on the profitability in Q2, if you can give any indication of that, how that has developed. Not that much year on year, more sequentially, maybe. I would be particularly interested in if you booked already some higher amount of dealer provisions that you didn't book in Q1, and would that also imply that maybe you have to book less dealer provisions in H2. The second question that I have is, you have mentioned this negative price mix, and you mentioned that also two weeks ago as one of the major reasons for your guidance revision. Could you maybe dig a little bit more into detail, maybe in terms of magnitude, how negative was it?

Speaker #3: Not that much year on year, more sequentially, maybe. And I would be particularly interested to know if you have already booked some higher amount of dealer provisions.

Speaker #3: That you didn't book in Q1. And would that also imply that maybe you have to book fewer dealer provisions in H2? The second question that I have is, you have mentioned this negative price mix, and you mentioned that also two weeks ago as one of the main reasons for your guidance revision.

Speaker #3: Could you maybe dig a little bit more into detail? Maybe in terms of magnitude—how negative was it? If you cannot tell us something about the precise magnitude, then maybe you can split up your comments between price and mix.

Horst Schneider: If you cannot tell us something about the precise magnitude, maybe you can split up your comments between price and mix. I think that price probably was a more negative contributor than mix. Thank you.

Speaker #3: I think that price probably was a more negative contributor than mix. Thank you.

Speaker #1: Yeah, thank you, Horst, and nice to hear from you. With regards to your questions—China being the first one, and second, about negative price and mix—I kindly ask for your understanding with regards to profitability per region.

[Company Representative] (BMW): Thank you, Horst, nice to hear from you. With regards to your questions, around China being the first one, second about negative price and mix. I kindly ask for your understanding with regards to profitability per region. You know that we do not disclose that. In that sense, I would also like to refrain from now making a statement with regards to whether it's sequentially or year on year change. The only statement that I can make, obviously, since we did an adjustment to our guidance about three weeks ago, that had a lot to do with China. There obviously was a general deterioration against previous year. I obviously cannot provide any detailed figures.

Speaker #1: You know that we do not disclose that. And in that sense, I would also like to refrain from now making a statement with regards to whether it's a sequential or year-on-year change.

Speaker #1: The only statement that I can make, obviously, since we did an adjustment to our guidance about three weeks ago—that had a lot to do with China—is that there obviously was a general deterioration against the previous year.

Speaker #1: But I obviously cannot provide any detailed figures. Your question on dealer provisions, or whether a provision was booked— you know that we call it dealer support.

[Company Representative] (BMW): Your question on dealer provisions or whether a provision was booked, you know that we call it a dealer support, and indeed there has been a dealer support payment at the end of Q2 referring to H1. That is in, so we have booked that in Q2. We will obviously not comment on the exact amount of that support. Let me give you basically the rough statement of we're looking at a low 3-digit EUR range there. That is about all that I would like to provide at this moment in time. I think the last point that you had on China was whether we would or whether the payments we made for H1 would have any impact with regards to H2. I cannot make any statement on this right now. We stick to our original planning of not planning any dealer support.

Speaker #1: And indeed, there has been a dealer support payment at the end of Q2, referring to the first half of the year. That is in.

Speaker #1: So, we have booked that in Q2. We will obviously not comment on the exact amount of that support. Let me give you basically the rough statement that we're looking at a low three-digit million euro range there.

Speaker #1: That is about all that I would like to provide at this moment in time. I think the last point that you had on China was whether we would have fewer dealers or whether the payments we made for H1 would have any impact with regards to H2.

Speaker #1: I cannot make any statement on this right now. We stick to our original planning of not planning any dealer support. If, by whatever means, it might be necessary, then at some point in H2, we might be booking some.

Speaker #1: But there's nothing in the plan at this moment in time. And with regard to your more detailed question on pricing and mix, we will make statements on that, but we will do so on July 30.

[Company Representative] (BMW): If by whatever means it might be necessary, then at some point in H2, we might be booking some, but there's nothing in the plan at this moment in time. With regards to your more detailed question on pricing and mix, we will make statements on that, but we will do so on 30 July. We're definitely not at the moment in time now having detailed figures available that would allow us to make any sustainable statement on individual sizes. Kindly ask for some more patience there, but as usual, once we come to our 30 July call, we will dive into the building blocks of pricing mix and overall performance side.

Speaker #1: And we're definitely not, at the moment, in a position to provide detailed figures that would allow us to make any sustainable statement on individual sizes.

Speaker #1: So kindly ask for some more patience there. But as usual, once we come to our July 30 call, we will dive into the building blocks of pricing, mix, and the overall performance side.

Speaker #1: Okay. Thank you, Stefan. Thanks, Horst. We'll now move on to the next caller, and that is Patrick Hummel of UBS. Patrick, the stage is yours.

Operator: Okay. Thank you, Stefan. Thanks, Horst. We'll now move on to the next caller, and that is Patrick Hummel of UBS. Patrick, the stage is yours.

Speaker #4: Thank you very much, Adam. Hi, Stefan. I would like to start with your comment that the second-quarter auto margin will be within that 1% to 3% corridor.

Patrick Hummel: Thank you very much, Adam. Hi, Stefan.

[Company Representative] (BMW): Patrick.

Patrick Hummel: I would like to start with your comment that the Q2 auto margin will be within that 1% to 3% corridor. As you pointed out, the restructuring is going to be booked in the H2, so Q2 is not going to be affected by that. If I take out the restructuring bit, which is 100 basis points out of the profit warning you had 3 weeks ago, that would suggest the underlying is between 2 and 4. Would you say that the Q2 is within 2 and 4 underlying, or are we running here at risk of missing that target? More specifically, AIPA was a topic. You had not booked anything in the Q1. Is there a positive one-off related to this included in the Q2? Can you give us a bit of color what the overproduction actually was in the Q2?

Speaker #4: As you pointed out, the restructuring is going to be booked in the second half. So, Q2 is not going to be affected by that.

Speaker #4: If I take out the restructuring bit, which is 100 basis points out of the profit warning you had three weeks ago, that would suggest the underlying is between 2 and 4.

Speaker #4: Would you say that the second quarter is within two and four underlying, or are we running here at risk of missing that target? And more specifically, IEPA was a topic.

Speaker #4: You had not booked anything in the first quarter. Is there a positive one-off related to this included in the second quarter? And can you give us a bit of color on what the overproduction actually was in the second quarter?

Speaker #4: You're talking about how inventories sound like you're going to have a negative production impact in the second half because of that. So it would be good to understand a little bit the dynamics here.

Patrick Hummel: You are talking about higher inventories. Sounds like you are going to have a negative production impact in the H2 because of that, so it would be good to understand a little bit the dynamics here. Very lastly, if you allow me to, you mentioned the bad consumer sentiment in some markets. Actually, if I look at your sales figures outside APAC and outside China, they look pretty decent. Do you think there is a lot of hesitation amongst consumers holding back purchase decisions so that you expect a better H2 in those markets now that we are on a resolution path in the Middle East as it seems, or what is your comment about reluctant consumers referring to? Thank you.

Speaker #4: And very lastly, if you allow me to, you mentioned the bad consumer sentiment in some markets. Actually, if I look at your sales figures outside APAC and outside China, they look pretty decent.

Speaker #4: So, do you think there's a lot of hesitation among consumers, holding back purchase decisions? Do you expect a better second half in those markets now that we're on a resolution path in the Middle East, as it seems?

Speaker #4: Or what is your comment about reluctant consumers referring to? Thank you.

Speaker #1: Thank you, Patrick. Well, indeed, the statement that we made at this moment in time is, obviously, only the rough statement that we made on being in the corridor in the second quarter. That, obviously, applies to our overall annual guidance.

[Company Representative] (BMW): Well, indeed, the statement that we made at this moment in time, obviously only the rough statement that we made on being in the corridor in the Q2, that obviously applies to our overall annual guidance. We will not change that to a quarterly guidance in any form. I understand the calculation that you did, but please let me also refrain from entering into that discussion. The AIPA, yes, is booked in Q2. That is definitely true. The third point in the first question, let us put it that way, where you said overproduction in Q2, I would not necessarily call it an overproduction. We are following our production plan, and that production plan also includes then less production in the H2, which then brings us down with inventory and also will have a positive working capital effect.

Speaker #1: We will not change that to a quarterly guidance in any form. I understand the calculation that you did, but please let me also refrain from entering into that discussion.

Speaker #1: The IEPA, yes, is booked in Q2. That is definitely true. And the third point—I think you, the third point in the first question, let's put it that way—where you said overproduction in Q2, I would not necessarily call it an overproduction.

Speaker #1: So, we're following our production plan. And that production plan also includes less production in the second half, which then brings us down with inventory, and also whatever positive working capital effect.

Speaker #1: And should, if everything goes well according to plan, also for the full year not have any relevant effect on working capital in the free cash flow calculations.

[Company Representative] (BMW): Should, if everything goes well according to plan, should also for the full year not have any relevant effect on working capital in the free cash flow calculations. But obviously, quarter-to-quarter comparisons every once in a while can be a bit off. You know that also in Q3, we have one of the months where we usually have one of the lowest production figures in the months due to August and several plants usually being closed. That has an effect there.

Speaker #1: But obviously, quarter to quarter, comparisons every once in a while can be a bit off. You know that also in Q3, we have one of the months where we usually have one of the lowest production figures in the months due to August and several plants usually being closed.

Speaker #1: That has an effect there.

Speaker #4: And IEPA, can I ask, is that roughly a wash, with the dealer compensation negative and a positive one-off that net out each other? Or is the IEPA benefit smaller?

Patrick Hummel: AIPA, can I ask, is that roughly a wash with the dealer compensation, negative and a positive one-off that net out each other, or is that smaller, the AIPA benefit?

Speaker #1: I will not make it I will not make a direct comparison between the two figures in the sense of then suddenly stumbling into exact figures.

Speaker #1: Since I called one a low three-digit effect, I will call the other one a low three-digit effect as well. So, in these rather general categories, they are a wash.

[Company Representative] (BMW): I will not make a direct comparison between the two figures in the sense of then suddenly stumbling into exact figures.

Patrick Hummel: Right.

[Company Representative] (BMW): Since I called one a low three-digit effect, I will call the other one a low three-digit effect as well. In these rather general categories, they are a wash, but only in the general category.

Speaker #1: But only in the general category.

Speaker #4: Okay. Got it.

Speaker #1: Please, it's simply that we're too early for this, Patrick. And on July 30, we'll provide more color on that as well, if that's fine.

Patrick Hummel: All right. Okay. Got it.

Speaker #4: Sure.

[Company Representative] (BMW): Please. It's simply we're too early for this, Patrick.

Speaker #1: Last question that you had with regards to consumer sentiment—you are completely right. You said that our market performance in the US and the EU was decent.

Patrick Hummel: Okay.

[Company Representative] (BMW): 30 July will provide more color on that as well, if that's fine.

Patrick Hummel: Sure.

[Company Representative] (BMW): Last question that you had with regards to consumer sentiment. You are completely right. You said that our market performance in the US and the EU was decent. We would only actually call it pretty good, also compared to market development. The point is, it's not only that it's volume, but what we're definitely seeing is that pricing, so the category pricing in these markets is not as favorable as it was in previous years. That is what we mean by consumer sentiment having deteriorated a bit. It simply is a bit more costly for us to sell the cars, but we are definitely having a very good sales performance in general. Obviously, especially for Europe, a very strong product momentum. I mentioned earlier in the details about our significant increase in the share of fully electrified vehicles in Europe. The iX3 plays a major role there.

Speaker #1: We would all actually call it pretty good, also compared to market development. The point is, it's not only that it's volume, but what we're definitely seeing is that pricing.

Speaker #1: So the category pricing in these markets is not as favorable as it was in previous years, and that is what we mean by consumer sentiment having deteriorated a bit.

Speaker #1: It simply is a bit more costly for us to sell the cars, but we are definitely having a very good sales performance in general.

Speaker #1: And then, obviously, especially for Europe, we have a very strong product momentum. I mentioned earlier, in the details, our significant increase in the share of fully electrified vehicles in Europe.

Speaker #1: The iX3 plays a major role there. So the car in Q2 has been working really well. I mean, in some way, one could say that was expected, given our very high order intake that we've seen over the recent months.

[Company Representative] (BMW): The car in Q2 has been working really well. In some way, one could say that was expected given our very high order intake that we've seen over the recent months. It also means we're executing well in making these deliveries. For the US, we're actually quite happy to comment that the X5, despite the launch of the new model, definitely being a product that is in run-out, is having a very successful run-out, and it's still outperforming the market, even though it only has about a couple more weeks of production to go, and then it's the final sell-off. In both those regions, we're doing well. I think we've talked a lot about China and also APAC after 16 June, and it's worthwhile to also emphasize these other two regions. Especially MINI, by the way.

Speaker #1: But it also means we're executing well in making these deliveries. And for the US, we're actually quite happy to comment that the X5, despite the launch of the new model—so definitely being a product that is in runout—is having a very successful runout and is still outperforming the market even though it only has about a couple more weeks of production to go.

Speaker #1: And then it's the final sell-off. So, in both those regions, we're doing well. I think we've talked a lot about China especially, and also APAC after June 16th.

Speaker #1: And it's worthwhile to also emphasize these other two regions. By the way, you know there's a special place in my heart for MINI, and it's very nice for me to watch and see the performance that the MINI team is generating, also and especially in Europe.

[Company Representative] (BMW): There's a special place in my heart for MINI, and it's very nice for me to watch and see the performance that the MINI team is generating also, and especially in Europe.

Speaker #4: That's why MG is not trying to build one.

Speaker #1: Thank you for that comment.

Speaker #4: Thanks.

Speaker #1: Many thanks, gentlemen. We'll move on to the next caller, and that is Stuart Pearson from OxCab Analytics. Stuart, the line is yours.

Patrick Hummel: That's why MG is now trying to build one.

[Company Representative] (BMW): Thank you for that comment.

Patrick Hummel: Thanks. That's right.

Operator: Many thanks, gentlemen. We'll move on to the next caller, and that is Stuart Pearson from Oxcap Analytics. Stuart, the line is yours.

Speaker #5: Good afternoon. Can you hear me? I can hear you well, Stuart. Nice to hear you. Yeah, it's great. Thanks for the very comprehensive overview.

Speaker #5: Just a couple left. I guess, just on the cost side—you mentioned, I think, that was a tailwind year-on-year. Obviously, during 2025, that was quite a feature.

Stuart Pearson: Yeah. Good afternoon. I hope you can hear me.

Operator: We can hear you fine.

[Company Representative] (BMW): We can hear you well, Stuart. Nice to hear you.

Stuart Pearson: Yes. Great. Thanks for all the very comprehensive overview. Just a couple left. Just on the cost side, you mentioned that was a tailwind year-on-year. Obviously, during 2025, that was quite a feature. Maybe it slowed a little bit in Q1. Just thinking about the SG&A. Is there anything more you can say on there? Presumably, you're not waiting for the CMD and the charges you announce in H2 before taking any action. I know BMW's always been very proactive on the cost side in the past. I don't know if there's anything you could add on that. Just coming back to mix and just going back to what you just said on the X5, holding up well. It is, but just those higher-end models, mix-wise, are a little weaker as you'd expect in Q2.

Speaker #5: Maybe it slowed a little bit in Q1, just thinking about the SG&A. Is there anything more you can say on that? Presumably, you're not waiting for the, I guess, the CMD and the charges you announced in H2 before taking any action?

Speaker #5: I know BMW has always been very proactive on the cost side in the past, so I don't know if there's anything you could add on that.

Speaker #5: And then just coming back to mix, and just coming back to what you just said on the X5, holding up well. I guess it is, but just those higher-end models, mix-wise, are a little weaker as you'd expect in Q2.

Speaker #5: So I just wonder, are we going to have a bit of an air pocket on that mix in Q3 as well? How quickly will the new X5 ramp up and deliver?

Speaker #5: So I just wonder on that. And if I'm allowed a final quick one, just other positive but your wonderful other division can swing around quite a lot from negative to plus 500 or more and so on.

Stuart Pearson: I just wonder, are we going to have a bit of an air pocket on that mix in Q3 as well? How quickly will the new X5 ramp up and deliver? I just wonder on that. If I'm allowed a final quick one, just other positive, but your wonderful other division can swing around quite a lot from negative to EUR +500 or more and so on. Is it like a significant number in that line item or just something we shouldn't lose too much sleep about? Thank you.

Speaker #5: Is it a significant number in that line item, or just something we shouldn't lose too much sleep over? Thank you.

Speaker #1: Thank you, Stuart. And if I may address both your first and your third question, also again with a remark that I made with regards to Horst's question: we will shed some more light on those detailed figures on July 30th.

[Company Representative] (BMW): Thank you, Stuart. If I may address both your first and your third question, also again with the remark that I made with regards to Horst's question. We will shed some more light on those detailed figures on 30 July. As I said before, we are not completely finalized yet. If you don't mind, we'll just put a significantly clearer statement on that topic in our script that we will read out on 30 July and then answer the question straight away so that you don't have to ask it once more in the call. Overall, on cost side, yes, we obviously emphasize the overall cost achievement in 2025 or in the course of 2025 with EUR 2.5 billion down. We are still on track to continue, as we also announced for 2026. We are keeping to our regular strict cost discipline.

Speaker #1: As I said before, we are not completely finalized yet. And if you don't mind, we'll just make a significantly clearer statement on that topic in our script, which we will read out on July 30th, and then answer the question straight away so that you don't have to ask it once more in the call.

Speaker #1: Overall, on the cost side, yes, we obviously emphasize the overall cost achievement in 2025, or in the course of 2025, with $2.5 billion down.

Speaker #1: We are still on track to continue as we also announced for 2026. So, we are keeping to our regular strict cost discipline. Everything else that we announced also on June 16th—there, indeed, we will only provide additional information at the CMD at the end of September.

Speaker #1: But those are also topics that are surely coming on top of us. Those are additional measures that, as we have called it so far, represent an acceleration and an intensification of existing measures. So, we expect some additional positive effects in the months going forward once we start implementing those measures.

[Company Representative] (BMW): Everything else that we announced also on 16 June, there, indeed, we will only provide additional information at the CMD at the end of September. Those are also topics that are surely coming on top. Those are additional measures, that is, as we called it so far, an acceleration and an intensification of existing measures. We expect some additional positive effects in the months going forward once we start implementing those measures. With regards to mix, we do not necessarily see a reduction of higher-end models in the mix. The X5 is holding up very strong, actually beyond our original indications. You may recall that at the beginning of the year, we had a very good sales momentum, especially of the X5 in China, already in a very difficult market environment. We're now seeing that it is holding up very well in the US.

Speaker #1: With regards to mix, we do not necessarily see a reduction of higher-end models in the mix. The X5 is holding up very strong—actually beyond our original indications.

Speaker #1: You may recall that at the beginning of the year, we had very good sales momentum, especially for the X5 in China, already in a very difficult market environment.

Speaker #1: We're now seeing that it is holding up very well in the US. And the X5 start of sales and visibility of the new model—that was the other part of the question—the new model of the X5 in the US will be in Q4.

[Company Representative] (BMW): The X5 start of sales and visible of the new model, that was the other part of the question, of the new model of the X5 in the US will be in Q4. For the rest of the world, sequentially, we will see bigger numbers than in Q1. Europe will also get some X5 already in Q4. I would say the more visible effect will be, of course, in the US, as you know that in relative terms, that is the biggest market for the X5, and it also has a logistical advantage of getting the car straight out of Spartanburg.

Speaker #1: For the rest of the world, sequentially, we will see bigger numbers than in Q1. Europe will also get some X5 already in Q4. I would say the more visible effect will be, of course, in the US.

Speaker #1: Yes, you know, in relative terms, that is the biggest market for the X5. And it also has a logistical advantage of getting the car straight out of Spartanburg.

Speaker #5: Yeah, understood. Thank you.

Speaker #1: Thank you, Stuart.

Speaker #4: Thanks, Stuart.

Speaker #1: Moving on to the next caller, José Arcemendi at JPMorgan. José, over to you.

Speaker #6: Thank you very much. A couple of questions, please. So, just to go back again to the restructuring charges, do you expect negotiations with the unions in Europe to be closed by the end of the third quarter?

Stuart Pearson: Understood. Thank you.

[Company Representative] (BMW): Thank you, Stuart.

Operator: Thanks, Stuart. Moving on. The next caller is Jose Asumendi at JPMorgan. Jose, over to you.

José Asumendi: Thank you very much. A couple of questions, please. Just to go back again to the restructuring charges, do you expect the negotiations with the unions in Europe to be closed by the end of the Q3? Or do you think this is more of a Q4 and therefore provisioning for restructuring charges will be more of a year-end topic? Also on the restructuring topic, just to clarify, the Q2, you did not take any restructuring actions, in Europe or outside of Europe? That's question one. Question two, can you give us a bit of an update on Neue Klasse and when you expect Neue Klasse to hit the impact the Chinese market, in the H2, I guess. Then three, on CapEx, anything to think about there on CapEx as we see CapEx declining structurally 2026 versus 2025? Thank you.

Speaker #6: Or do you think this is more of a fourth-quarter issue, and therefore provisioning for restructuring charges will be more of a year-end topic? And also, on the restructuring topic, just to clarify: in the second quarter, you did not take any restructuring actions in Europe or outside of Europe?

Speaker #6: That's question one. Question two, can you give us a bit of an update on Neue Klasse and when you expect Neue Klasse to hit or impact the Chinese market?

Speaker #6: In the second half of the year, I guess. And then, three, on CapEx—anything to think about there on CapEx as we see CapEx declining structurally in 2026 versus 2025?

Speaker #6: Thank you. Yeah, sure. Nice to hear from you, José. With regards to the restructuring charges, I cannot give you an official statement on when the negotiation and discussions with our workers' council colleagues and partners will be closed, and based on that, I also cannot make a statement with regards to which quarter will be affected.

[Company Representative] (BMW): Yeah. Sure. Nice to hear from you, Jose. With regards to the restructuring charges, I cannot give you an official statement on when the negotiation and discussions with our workers council colleagues and partners will be closed. Based on that, I can also not make a statement with regards to which quarter will be affected. It is for sure that it will be in the H2 at some point that we will be booking those figures, but no definite date at this moment in time. You are completely right. No restructuring included in any way in the Q2 figures, they're not burdening Q2, also not in Europe. With regards to the Neue Klasse, I obviously gave an update, how well it is running in Europe being the primary region. We also actually are seeing the first sales in some APAC markets pretty well.

Speaker #6: It is for sure that it will be in the second half at some point that we will be booking those figures, but no definite date at this moment in time.

Speaker #6: You are completely right. No restructuring is included in any way in the Q2 figures, so they're not burdening Q2—also not in Europe. With regards to the Neue Klasse, I obviously gave an update on how well it is running in Europe, being the primary region.

Speaker #6: We are also actually seeing the first sales in some APAC markets, which are going really well. With China, the official start of deliveries is at the end of this year.

Speaker #6: So, towards December, there will be no real visible significant effect in our figures in 2026, so we expect to have that happen in 2027.

[Company Representative] (BMW): With China, the official start of deliveries is at the end of this year, so towards December. There will be no real visible significant effect in our figures in 2026. We expect to have that happen in 2027. That is, by the way, in line with our original planning. We are still very positive and see a lot of reassurance out of the feedback that we received by our dealer body at the Beijing Auto Show, on the car where it was unveiled and where it was also made clear what all the technical features would be. Therefore we are positive about having a car on the market that meets all the requirements of a Chinese consumer demand going forward. That obviously means that for 2027, we see a certain upside potential with regards to the overall negative market development that we currently see in China.

Speaker #6: And that is, by the way, in line with our original planning. We are still very positive and see a lot of reassurance from the feedback that we received from our dealer body at the Beijing Auto Show, where the car was unveiled and where it was also made clear what all the technical features would be.

Speaker #6: Therefore, we are positive about having a car on the market that meets all the requirements of Chinese consumer demand going forward. That obviously means that for 2027, we see a certain upside potential with regards to the overall negative market development that we currently see.

Speaker #6: In China—and lastly, your questions on CapEx. In 2026, it is moving down just as we anticipated, and as we also said, with our investment peak already passing in 2024, we'd be down in 2025.

[Company Representative] (BMW): Lastly, your question on CapEx. In 2026, it is moving down just as we anticipated and as we also said that with our investment peak already passing in 2024, we'd be down in 2025, and down then again in 2026. Yes, we expect a materially lower figure than last year.

Speaker #6: And down then again in 2026. So yes, we expect a materially lower figure than last year. And I'm speaking full year here now, right, on CapEx.

Speaker #6: So, definitely not on a quarterly basis. But I think that's also not what you expected me to say.

Speaker #1: Okay. That's clear. That's clear.

Speaker #6: Great. Thank you, José.

José Asumendi: Thank you.

[Company Representative] (BMW): I'm speaking full year here now, right, on CapEx, so definitely not on a quarterly base. I think that's also not what you expected me to say.

Speaker #4: Thanks, José. Thanks, Stefan.

Speaker #1: Next up is Tom Narayan of RBC. Tom, over to you.

José Asumendi: Okay.

Speaker #5: Hey, thanks. Thanks, all. Just a quick clarification and then a follow-up. Stefan, I think you said it was positive for cash flow in Q2, below Q1.

[Company Representative] (BMW): Great. Thank you, Jose.

Operator: Thanks, Jose. Thanks, Stefan. Next up is Tom Narayan of RBC. Tom, over to you.

Speaker #5: Q2, working cap hurt by the inventory. But then there was a positive item that I missed—apologies. So just maybe clarification on what that was?

Tom Narayan: Hey, thanks. Thanks all. Just a quick clarification and then a follow-up. Stefan, you said, I think it was positive for cash flow in Q2, below Q1. Q2, working cap hurt by the inventory, but there was a positive item that I missed, apologies. Just maybe clarification on what that was. I think your guidance has a resolution on Mexico on tariffs. I guess we had the USMCA declined. Is this assuming some resolution, like a bilateral deal with Mexico or something? What exactly, I guess, is incorporated in the guidance on USMCA? It would have to happen this year, right? Something happening in H2? Those are the questions. Thanks.

Speaker #5: And then I think your guidance has a resolution on Mexico on tariffs. I guess we have the USMCA declined. Is this assuming some resolution, like a bilateral deal with Mexico or something?

Speaker #5: Or what exactly, I guess, is incorporated in the guidance on USMCA? And it would have to happen this year, right? So, something happening in H2.

Speaker #5: So, yeah, those are the questions. Thanks.

Speaker #6: Yeah. First of all, Tom, nice to hear from you. And second of all, I will just—and that's probably the best way to answer your first question—I will just read once more what I read in the statement.

[Company Representative] (BMW): First of all, Tom, nice to hear from you. Second of all, I will just, and that's probably the best way to answer your first question. I will just read once more what I read, in the statement, and that includes this positive point that we mentioned, and I start quoting myself now. The net effect of depreciation and investment continues to make a positive contribution. Taking these effects into account, we expect a positive free cash flow in Q2, very likely below the level of Q1. I just want to make sure that I repeat my very likely as well, apart from the positive point that I mentioned. I think it should be clear now, right?

Speaker #6: And that includes this positive point that we mentioned. And I’ll start quoting myself now: the net effect of depreciation and investment continues to make a positive contribution.

Speaker #6: Taking these effects into account, we expect a positive free cash flow in Q2, very likely below the level of Q1. I just want to make sure that I repeat my 'very likely' as well, apart from the positive point that I mentioned.

Speaker #6: So, I think it should be clear now, right?

Speaker #4: Yeah.

Speaker #6: Good. Okay. And second, your question with regards to USMCA—you're completely right. In our original guidance for the full year, our anticipation on the tariff side was that the deal between the EU and the US would be taken care of by the middle of the year.

Tom Narayan: Yeah.

[Company Representative] (BMW): Good. Okay. Second, your question with regards to USMCA, you're completely right. In our original guidance for the full year, our anticipation on the tariff side was that the deal between the EU and the US would be taken care of by the middle of the year. We all know that premise for our guidance took place. We got the adjustments in place in Europe down to 0% by the middle of the year. That was the one part. That, by the way, was also the big chunk in the guidance assumption that we have. The significantly smaller part, India, you're completely right, is the USMCA topic, and there our expectation that the 27.5% tariffs from Mexico into the US would be dropping as well. That, you're right, has not taken place.

Speaker #6: We all know that the premise for our guidance took place, and we got the adjustment in place in Europe down to 0% by the middle of the year.

Speaker #6: That was the one part. That, by the way, was also the big chunk in the guidance assumption that we have. The significantly smaller part in there—you are completely right—is the USMCA topping it there.

Speaker #6: Our expectation was that the 27.5% tariff from Mexico into the US would be dropping as well. That, you're right, has not taken place. So there, we indeed have a deviation from what was included in the guidance, but it is not of a size that would have any relevant effect to materially change our guidance or our expectations.

[Company Representative] (BMW): There, we indeed have a deviation to what was included in the guidance, but it is not of a size that it would have any relevant effect to materially change our guidance or our expectations.

Speaker #5: Got it. Thank you.

Speaker #6: Thank you.

Speaker #1: Thanks, Tom. Our next caller is Harold Hendricks from Citi. Harold, the line is yours. We can hear you fine.

Tom Narayan: Got it. Thank you.

[Company Representative] (BMW): Thank you.

Operator: Thanks, Tom. Our next caller is Harald Hendrikse from Citi. Harald, the line is yours.

Speaker #7: We can hear you, Harold. Sorry, sorry. Thanks for taking my question. Really, only one question left after all the ones we've listened to. And thank you so much for your detailed explanations and stuff like that.

Speaker #7: But the rather obvious question is, 5% in Q1 on the automotive side—we understand the conditions have changed, and obviously, we've seen the warning.

Harald Hendrikse: Sorry, can you hear me okay?

[Company Representative] (BMW): We can.

Operator: Yeah, we can hear you, Harald.

Harald Hendrikse: Sorry. Thanks for taking my question. Really only one question left after all the ones we've listened to. Thank you so much for your detailed explanations and stuff like that. The rather obvious question is, 5% in Q1 on the automotive side, we understand the conditions have changed and obviously we've seen the warning. Even if we have the low end of the full year guide in Q2, it means that H1 is either at the super high end or even above the full year range. It rather strongly suggests that H2 is going to be weaker still. I was just wondering whether you have in meetings recently or whether you can provide any of the sort of big puts and takes. We've obviously heard about production.

Speaker #7: But even if we have the low end of the full-year guide in the second quarter, it means that the first half is either at the super high end, or even above, the full-year range.

Speaker #7: So, rather, it strongly suggests that the second half is going to be weaker still. I was just wondering whether you have, in meetings recently, or whether you can provide any of the sort of big puts and takes.

Speaker #7: We've obviously heard about production. Price mix presumably isn't going to change, but at the same time, you're going to have more new product coming through.

Speaker #7: What are the sort of puts and takes that we should think about? What puts the margin at that low level in the second half, please?

Speaker #7: Thank you.

Harald Hendrikse: Price mix presumably isn't going to change. At the same time, you're going to have more new product coming through. What are the sort of puts and takes that we should think about that puts the margin at that low level in H2, please? Thank you.

Speaker #6: Thank you, Harold. And yes, I completely agree with you. It's an obvious question, and also a very relevant one. We will go into the building blocks in more detail during our call on July 30.

[Company Representative] (BMW): Thank you, Harald. Yes, I completely agree with you. It's an obvious question, and also a very relevant one. We will go into the building blocks also in more detail in our call on 30 July. Just for the sake of the triangulation that you did, I think the one point that also was mentioned earlier that is not included in H1, is the effect that we included in our resetting of the guidance for the intensification and acceleration of the structural and efficiency measures. They are only in H2, and that obviously is already one significant part of the answer. That regardless of the detail of all the other figures, definitely makes a difference.

Speaker #6: But just for the sake of the triangulation that you did, I think the one point that was also mentioned earlier, and is not included in the first half of the year, is the effect that we included in our resetting of the guidance for the intensification.

Speaker #6: And acceleration of the structural and efficiency measures—they are only in H2. And that, obviously, is already one significant part of the answer. That, regardless of the detail of all the other figures, definitely makes a difference.

Speaker #7: Okay, thank you. I look forward to the details on the second. Thank you.

Speaker #6: And we will dive into those details, Harold.

Speaker #7: Yeah. Perfect. Thanks.

Speaker #6: Thank you, Harold.

Speaker #1: We are currently at our last caller, which is Anthony Dick at Otto. So, Anthony, at the moment, you will be bringing it home. Over to you.

Harald Hendrikse: Okay. Thank you. I look forward to the detail on the 30. Thank you.

[Company Representative] (BMW): We will dive into those details, Harald. Yeah.

Harald Hendrikse: Perfect. Thanks.

[Company Representative] (BMW): Thank you.

Operator: Thanks, Harald. We are currently at our last caller, which is Antoine Decourt at Oddo. Antoine, at the moment, you will be bringing it home. Over to you.

Speaker #1: Hey, Anthony, we can hear you.

Speaker #8: Hi, guys. Thanks for taking the question. So, the first question is a bit similar to the previous one, but actually going the other direction.

Speaker #8: Because if I look at Q2, and if we adjust for the tariff reimbursement, I would be on a sort of underlying margin of around 2%.

Antoine Decourt: Hello?

[Company Representative] (BMW): Hey, Antoine. We can hear you.

Operator: We can hear you.

Antoine Decourt: Hi, guys. Thanks for taking the question. The first question is a bit similar to the previous one, but actually going the other direction. If I look at Q2, and if we adjust for the tariff reimbursement, I would be on a sort of underlying margin of around 2%. For H2, if I subtract the restructuring, I would also be on the underlying margin of 2%. Usually, the H2 margin is weaker than the H1 with the Q4 seasonality and all that. Just wondering if I've got that correct, and what would be the drivers actually to maintain the same level of underlying margin in H2 and offset that seasonality? My second question is on China. I understand that the plan is not to pay out any more dealer support in the H2.

Speaker #8: And for H2, if I subtract the restructuring, I would also be on the underlying margin of 2%. And usually, the H2 margin is weaker than the H1, with Q4 seasonality and all that.

Speaker #8: So, just wondering if I've got that correct. And what would be the drivers actually to maintain the same level of underlying margin in H2 and offset that seasonality?

Speaker #8: And then my second question is on China. So, I understand that the plan is not to pay out any more dealer support in the second half of the year, but just wondering if the guidance range does account for potential dealer support, or if that's something that would come on top of the current guidance that's been adjusted.

Antoine Decourt: Just wondering if the guidance range does kind of account for potential dealer support or if that's something that would come on top of the current guidance that's been adjusted. Thank you.

Speaker #8: Thank you.

Speaker #6: Well, it's kind of difficult for me to answer the first question, since obviously you've done the calculations based on your models of the figures that you see for us in detail.

Speaker #6: We don't even have our detailed figures for Q2 yet. So, similar as I said to Harold before, I can obviously understand the general logic of what's being calculated, but I cannot confirm, deny, or whatever any individual figure that you just mentioned. The triangulation in general makes sense to me from, let's call it, a mathematical point of view.

[Company Representative] (BMW): It's kind of difficult for me to answer the first question, since obviously you've done the calculations based on your model of the figures that you see for us in detail. We don't even have our detailed figures for Q2 yet. Similar as I said to Harald before, I can obviously understand the general logic of what's being calculated, but I cannot confirm, deny, or whatever any individual figure that you just mentioned. The triangulation in general makes sense to me from, let's call it a mathematical point of view. That part understood, but I cannot confirm any individual detail. The other question. By the way, as I also said towards Harald's point, we will shed some more light and also provide our typical bridges on 30 July.

Speaker #6: So that part is understood, but I cannot confirm any individual detail. The other question that you—and by the way, as I also said towards Harold's point—we will shed some more light and also provide our typical bridges on July 30.

Speaker #6: And I think by then, it will also be easier for you to follow within your model whether your assumptions actually hold true or not.

Speaker #6: On the second question, does the guidance range allow for a potential or a possible dealer support payment if that was necessary in H2? I gave a certain hint earlier towards Patrick's question.

[Company Representative] (BMW): I think by then, it will also be easier for you to follow within your model whether your assumptions actually hold true or not. On the second question, does the guidance range allow for a potential or a possible dealer support payment if that was necessary in H2? I gave a certain hint earlier, towards Patrick's question, what the size was. Since we basically have corridors of 2 percentage points, or 2% being wide by 2 percentage points, obviously such a change would easily fit into our typical guidance range. Therefore, I would not see any issue with regards to an overall guidance discussion based on if we had to do another dealer support payment at any point in H2, which doesn't indicate that there will be one, because as I said before, we're currently not planning for another one.

Speaker #6: What the size was. Now, since we basically have corridors of 2 percentage points, or 2% being wide by 2 percentage points, obviously such a change would easily fit into our typical guidance range.

Speaker #6: Therefore, I would not see any issue with regard to an overall guidance discussion based on if we had to do another dealer support payment at any point in H2, which doesn't indicate that there will be one because, as I said before, we're currently not planning for another one.

Speaker #6: So, it was kind of a lengthy, winded answer to what you said, but the general statement is: it would fit if there was a need for one.

Speaker #8: Okay. That's clear. Thank you.

Speaker #6: Thank you.

Speaker #1: Thanks, Anthony. Suggesting, Anthony, would bring it home because, of course, tempting fate. And Michael, Tyndall from HSBC could not resist the temptation. So Michael, you get to ask a question.

[Company Representative] (BMW): It was a kind of a lengthy, winded answer to what you said, but the general statement is, it would fit if there was a need for one.

Antoine Decourt: Okay. That's clear. Thank you.

Speaker #5: Adam, you know me at least. You know me only too well. Just two really quick ones. One's a technicality. The EU-US tariff factor zero—was that backdated to the 1st of August last year, or was that from the date of the agreement this year?

[Company Representative] (BMW): Thank you.

Operator: Thanks, Antoine. Suggesting Antoine would bring it home, both, of course, sensing fate and Michael Tyndall from HSBC could not resist the temptation. Michael, you get to ask the question.

Michael Tyndall: Adam, you know me only too well. Just two really quick ones. One's a technicality. EU-US tariff back to 0, was that backdated to 1 August last year, or was that from the date of the agreement this year? Curious to know how much of an impact is coming through in Q2. Just the second one on China. If I remember rightly, in Q1, you were talking about the adjustment to MSRPs, the lowering of discounts. It was still a net positive on ATP. Might be the wrong time to ask, but is that trend continuing, or has the world changed in China as a result of the competitive pressures? Thank you.

Speaker #5: Curious to know how much of an impact is coming through in Q2. And then just a second one on China. If I remember rightly, in Q1, you were talking about the adjustment to NSRPs and lowering of discounts.

Speaker #5: It was still a net positive on ATPs. Might be the wrong time to ask, but is that trend continuing, or has the world changed in China as a result of the competitive pressures?

Speaker #5: Thanks.

Speaker #6: Yeah, sure. Sure, Mike. And nice to hear from you. First question: definitely no backdating to August 2025. The agreement that was taken—or actually, it was, in that sense, a general agreement back in 2025.

[Company Representative] (BMW): Sure, Mike, nice to hear from you. First question, definitely no backdating to August 2025. The agreement that was taken, or actually, it was in that sense, a general agreement back in 2025. The implementation that was taken by the EU was going into effect on 1 July 2026. That's the moment as of when the reduced tariffs of 0% for any imports into the EU from the US take place. No backdating there. Very clear answer.

Speaker #6: The implementation that was taken by the EU was going into effect on July 1, 2026. So that's the moment as of when the reduced tariffs of zero percent for any imports into the EU from the US take place.

Speaker #6: So, no backdating there. Very clear answer.

Speaker #5: No benefit in Q2, then, as well?

Speaker #6: No. No, no. No, definitely not. No, no. There's no impact, no specific tariff impact due to the EU implementation in Q2. It will be taking place as of July 1st.

Michael Tyndall: That's no benefit in Q2 then as well?

Speaker #6: In that sense, it is exactly in line with how we had it in our planning for the whole of 2026, as of the beginning of 2026.

[Company Representative] (BMW): No, definitely not.

Michael Tyndall: Okay

[Company Representative] (BMW): specific tariff impact due to the EU implementation in Q2. It will be taking place

Speaker #6: No change there, also not even in timing. No change in effect, no change in timing. And with regard to your second question, addressing China, I think it's a very good question.

Michael Tyndall: Got it. Thanks.

[Company Representative] (BMW): as of 1 July. In that sense, exactly in line with how we had it in our planning for 2026 as of the beginning of 2026. No change there. Also, not even in timing. No change in effect, no change in timing. With regards to your second question addressing China, I think it's a very good question. Yes, overall situation in China, obviously difficult. Yes, we did a number of MSRP adjustments. They were actually not only in Q1. They started off in November 2023, and then month by month, a number of models was adjusted. You surely remembered that our statement was we're doing a reduction MSRP with a clear objective of lowering the discount level and not lowering the transaction price level. What we also saw then, until roughly the end of Q1, was indeed an uptick in transaction prices.

Speaker #6: Yes, the overall situation in China is obviously difficult. And yes, we did a number of MSRP adjustments. They were actually not only in Q1—they started off in November of last year, and then, month by month, a number of models were adjusted.

Speaker #6: And you surely remember that our statement was we're redoing a reduction in MSRP with a clear objective of lowering the discount level and not lowering the transaction price level. What we also saw then, until roughly the end of Q1, was indeed an uptick in transaction prices.

Speaker #6: So, the strategy that we implemented there worked, since transaction prices have indeed started to drop. However, they are not yet at a level where most of 2025 was.

Speaker #6: So, it is still paying off, but it's obviously now paying off in a significantly worse market environment than was originally anticipated going into the year.

[Company Representative] (BMW): The strategy that we implemented there worked. Since that, transaction prices indeed have started to drop, they are not at a level yet where most of 2025 was. It is still paying off, it's obviously now paying off in a significantly worse market environment than it was originally anticipated going into the year.

Speaker #5: Got it. Thank you.

Speaker #6: Thank you.

Speaker #1: Thanks, Mike. That was the last question. So, thank you, everybody, for joining and sharing your questions with us. Thank you, Stefan, for the answers.

Speaker #1: Before we round out the call, please note that if you've got any other questions, do reach out to the Investor Relations team and we'll happily support.

Michael Tyndall: Thank you.

[Company Representative] (BMW): Thank you.

Operator: Thanks, Mike. That was the last question. Thank you everybody for joining and sharing your questions with us. Thank you, Stefan, for the answers. Before we round out the call, please note if you have got any other questions, then do reach out to the investor relations team, and we will happily support. For those who were not able to join us in Spartanburg and those who would like to have a glimpse of what we showed last week when we had our event built around the X5 world premiere, where we also had heads of the business from commercial, financial services, and also from production, as well as a view of the plants and a quick glimpse of Humanoids, there are some charts on our website that give an update on what was there.

Speaker #1: For those who were not able to join us in Spartanburg, and for those who would like to have a glimpse of what we showed last week when we had our event built around the X5 World Premiere, we also had heads of business from Commercial, Financial Services, and also from Production.

Speaker #1: As well as a view of the plants and a quick glimpse of humanoids, there are some charts on our website that give an update on what was there. For those who are not on our mailing list, where we shared the links to those presentations and would like to join, let us know.

Speaker #1: Otherwise, refer to the email or go straight to the website, where you can see, under the Group Events chapter, the charts that were shown at that presentation.

Operator: For those who are not on our mailing list, where we shared the links to those presentations and would like to join, let us know. Otherwise, refer to the email or go straight to the website where you can see under the group events chapter, the charts that were shown at that presentation. Before we conclude, one final piece of information. Our Q2 official call will be taking place on Thursday, 30 June. As usual, the press release and the quarterly statement will be published at 7:30 AM here in Munich, and we will begin speeches at 8:30 AM here in Munich with our CEO and CFO. After that, there will be the media Q&A, and then at 10:15 AM, Central European Time, we will have the Q&A for investors and analysts. That is a point of reference.

Speaker #1: And before we conclude, one final piece of information. Our Q2 official call will be taking place on Thursday, the 30th of June. As usual, the press release and the quarterly statement will be published at 7:30 in the morning here in Munich.

Speaker #1: We will begin speeches at 8:30 a.m. here in Munich with our CEO and CFO. After that, there will be the media Q&A, and then at 10:15 a.m. Central Bavarian Time, we will have the Q&A for investors and analysts.

Speaker #1: So that is a point of reference. We look forward to having the call then and to engaging in dialogue with those who wish to raise questions.

Speaker #1: And we'll get to the details, as Stefan shared. With that, we'll round out for today. Thank you again for joining. Have a good rest of the day and a great weekend.

Operator: We look forward to having the call then and having dialogue with those who wish to raise questions, and we'll get to the details as Stefan shared. With that, we'll round out for today. Thank you again for joining. Have a good rest of the day and a great weekend.

[Company Representative] (BMW): Bye-bye, everybody.

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