Two Blows From China Forced BMW To Cut Target Of Cash Flow And Profit 2025

The new BMW iX3 50 xDrive. (Photo: BMW Group)

JAKARTA - The BMW AG Management Board today announced significant adjustments to its financial guidance for the 2025 fiscal year, blaming China's sluggish volume performance and unexpected cost challenges. The most striking adjustment was seen in the projection of Free Cash Flow (Free Cash Flow) in the Automotive Segment, which was cut by nearly 50 percent.

In its official press release, BMW Group explained that although the company managed to record volume growth in Europe and America until September, the volume growth target in China's main market was below expectations.

BMW Group adjusts outlook for 2025. Get all information here 👇 https://t.co/gtPVslmqPZ

— BMW Group (@BMWGroup) October 8, 2025

BMW Group adjusts outlook for 2025. Get all information here 👇 https://t.co/gtPVslmqPZ

Performance in China is the main driver of this adjustment. BMW decided to reduce volume expectations for the Chinese market in the fourth quarter. In addition, the company must also provide financial support to strengthen the profitability of local dealers, following a significant commission reduction from Chinese banks related to financial products and insurance for final customers.

Revised Financial Projections

As a result of these factors, coupled with several assumptions regarding the reduction in tariffs that have not been fully realized, BMW revised a number of its main performance indicators.

The company is now lowering the expectations of free cash flow (Free Cash Flow) in the automotive segment to slightly above 2.5 billion euros, or about half of the previous estimates that were above 5 billion euros. Meanwhile, profit before tax (Group Earnings before Tax) is expected to decline slightly, in contrast to the initial projections that estimated similar results to the previous year.

Another indicator that was also adjusted was Return on Capital Employed (RoCE) in the automotive segment, which is now pegged in the range of 8 to 10 percent, down from the previous estimate in the range of 9 to 13 percent. The automotive EBIT margin is still maintained in corridors of 5 to 7 percent, but BMW estimates the realization will be at the lower limit, which is around 5 to 6 percent.

The drastic decline in the projected Free Cash Flow was also due to new assumptions regarding customs returns. BMW now assumes that customs returns from American and German authorities, which are worth hundreds of millions of euros, will not be accepted in 2025 as previously assumed, but will only be paid in 2026.

Despite this, BMW Group affirms its commitment to maintaining a dividend payment ratio of 30 to 40 percent of net profit, as well as continuing its share buyback program.

The full quarterly report and adjusted guidance details will be published on November 5, 2025 in the BMW Group Quarterly Statement to September 30, 2025.