In recent developments within the automotive industry, Oliver Zipse, the CEO of BMW, has put forth a significant proposal aimed at the European Union (EU): to reduce the import tariffs on vehicles coming from the United States from the current rate of 10% down to 2.5%. This reduction aligns with the tariffs that the U.Simposes on vehicles coming from the EU, and it appears to be a strategic move in response to concerns that President Biden may impose additional tariffs on EU productsDuring his remarks, Zipse emphasized that tariffs are detrimental to free trade and hinder innovative research and development, urging the EU to take a substantial step forward.

Adding to the contentious landscape, reports confirmed that as of January 27, both Tesla and BMW have initiated legal action against the European Court to challenge the newly imposed tariffs on electric vehicles imported from China.

The statement released by BMW highlighted concerns that the EU's tariff on battery electric vehicles would fail to enhance the competitiveness of European manufacturers, adversely impacting their business models globally and limiting the supply of electric vehicles to European customers

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In an era where decarbonization is critical, such measures could potentially hinder progress in the transport sector.

It is quite understandable that Zipse is paying close attention to the markets in both China and the United States.

A comparative analysis of the sales figures from last year for Germany's three luxury automobile manufacturers known as BBA—Benz, BMW, and Audi—reveals that while BMW has managed to increase its overall sales, it has notably outpaced its competitors in the sector of electric vehicles, steering clear of the downturn experienced by both Mercedes-Benz and Audi.

According to available data for 2024, the anticipated total deliveries worldwide for the sub-brands of Benz, BMW, and Audi are projected to stand at 2.389 million, 2.451 million, and 1.671 million respectively, reflecting a decline across all brands compared to 2023. The year-on-year decrease for Mercedes-Benz, BMW, and Audi is stated as 4%, 4%, and 11.8% respectively.

If one examines the core brand sales figures, last year saw Mercedes-Benz, BMW, and Audi’s global sales reach 1.983 million, 2.20 million, and 1.671 million, indicating a year-on-year decrease of 3%, 2.3%, and 11.8% respectively.

Focusing particularly on the electric vehicle market, BMW has projected a global delivery of 426,600 fully electric models in 2024, witnessing a growth of 13.5%. Conversely, Mercedes-Benz and Audi recorded electric vehicle sales of 204,600 and 164,000 respectively during the same period, indicating declines of 22% and 8% year-on-year.

However, while BMW's overall performance might seem commendable, it hides the company's struggles within the pivotal markets of China and the United States.

In China, last year's sales figures for Mercedes-Benz, BMW, and Audi were reported at 683,600, 714,500, and 649,400 units respectively, with year-on-year declines registering at 7%, 13.4%, and 10.9%. Notably, BMW experienced the steepest decline, particularly between July and September, where it faced a staggering 29.8% drop, with sales plummeting to just 147,700 units.

Despite this decline, BMW's sales results were likely maintained through aggressive pricing strategies that sacrificed long-term brand value and short-term profit margins

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Their entry-level models, such as the i3 and iX3, were priced significantly lower than competitors like Tesla.

Furthermore, the challenges faced by BMW in China are starkly illustrated by decisions among major automotive dealers like Zhongsheng Group and Yongda Automobile to either shut their BMW dealerships or pivot towards emerging brands, further evidencing BMW's declining status within that market.

Meanwhile, looking across the Pacific to the United States, BMW also faces the daunting task of keeping pace with the rapidly advancing Mercedes-BenzBMW's reported U.Ssales were 397,600 units last year, marking just a 0.5% increaseIn contrast, Mercedes-Benz enjoyed a 9% uptick in sales to reach 324,500 units, despite BMW's higher positioning within the market.

Additionally, BMW's iX3, produced in China and exported back to Europe, has been incorporated into the EU's 20.7% tariff regime, a concern that does not currently affect Mercedes and Audi.

The complexity of the U.S

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market cannot be underestimatedAlthough BMW and Mercedes have established production facilities in South Carolina and Alabama, which offer a degree of insulation from the new tariff regime, BMW's reliance on its San Luis Potosi plant in Mexico for its new generation (Neue Klasse) models raises questionsAs a result, post-2027, these models may easily fall subject to punitive tariffs in the U.S.

Challenges for the eagerly anticipated Neue Klasse extend beyond potential tariffs in AmericaFollowing the introduction of the production version of the Vision Neue Klasse concept car, its design language has started infiltrating BMW's latest offerings, including the new 5 Series.

However, the reception of this forward-thinking design among consumers is mixed at bestSince March of last year, sales of the new 5 Series in China have not once exceeded 10,000 units monthlyAt one point during the second quarter, the model suffered consecutive months of falling below 5,000 units, revealing a stark contrast to the Mercedes-Benz E-Class, which regularly surpasses 10,000 sales per month

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In the U.S., the scenario was different, as the new 5 Series reported a significant 44% increase in year-on-year sales during the third quarter.

Of particular note is that this new generation retains the BMW's latest CLAR platform, which accommodates both combustion and electric drivetrains, diverging significantly from the pure electric platforms adopted by Mercedes’ MMA and Audi’s PPEWhether this versatile strategy will result in a competitive disadvantage for BMW’s new electric models compared to those of Mercedes and Audi remains unclear.

What is certain, however, is that Zipse, the driving force behind the Neue Klasse, is slated to depart from the company before the 2026 launch of the seriesAfter securing a two-year extension from the supervisory board, it has been confirmed that Zipse will step down upon the conclusion of his term in 2026.

Another of Zipse's controversial projects involves the overhaul of the Mini brand

His strategy, which includes partnering with Great Wall Motors to shift the Mini electric production line from the UK to China, and transitioning to a commission-based sales model from the traditional dealership framework, seems to have faltered, at least from a sales perspective.

The Mini brand's global sales for 2024 are forecasted to dip to 244,900 units—reflecting a 17.1% decline from the previous year and juxtaposed against a peak selling rate of 371,700 units in 2017.

In official statements, BMW has downplayed this decline, attributing it to a “product refresh” within the Mini brandOn the contrary, the introduction of the dealer-agent model, aimed at reclaiming pricing power from dealerships and reducing sales costs, appears to have backfired.

In markets like the UK, where the rollout of the agent model has been delayed, Mini sales have remained stable compared to 2023. However, in Germany, where the model has been implemented, Mini sales have dropped by an alarming 29.1%, with substantial declines also reported in France and Italy at 30.6% and 34.4%, respectively.

Going forward, BMW plans to leverage the experience gained from the Mini brand's sales model transformation and implement a similarly structured agent model across its own brand by January 2026. With both Volkswagen and Stellantis stepping away from the agent model, whether BMW can successfully navigate a vastly complicated international landscape while simultaneously tackling the launch of Neue Klasse, implementing their dealership system overhaul, and managing Zipse's departure remains to be seen.