261 BMW Group Report 2024 To Our Stakeholders Combined Management Report Group Financial Statements Responsibility Statement and Auditor’s Report Remuneration Report Other Information Outlook Expected consequences for the BMW Group Developments on international automobile markets have a direct impact on the BMW Group. A challenging competitive environ- ment and macroeconomic, trade and geopolitical developments could all have a significant impact on business performance. The close cooperation between our sales network and our production network and a flexible vehicle architecture allow the BMW Group to respond even to unforeseeable developments. ↗ Risks and Opportunities Assumptions used in the outlook The outlook contains forward-looking statements based on the BMW Group’s expectations and assessments and may be influ- enced by unforeseeable events. As a result, actual outcomes may vary, either positively or negatively, from the expectations described below due to changes in the political and economic en- vironment and other factors. The following outlook covers a forecast period of one year and is based on the composition of the BMW Group during that time. The outlook takes account of all information available at the time of reporting that could have an impact on the BMW Group’s per- formance. The expectations contained in the outlook are based on the BMW Group’s forecast for 2025 and reflect its status at the time of preparing the Group Financial Statements. The basis for the preparation of and the principal assumptions used in the fore- casts – which consider the consensus opinions of leading organ- isations, such as economic research institutes and banks – are set out below. The BMW Group is anticipating the following developments in the 2025 financial year: Demand is expected to increase in 2025 due to further stabilisa- tion of inflation and additional moderate cuts in key interest rates in many countries. In China, the BMW Group expects the market environment to re- main challenging as the level of competition continues to in- crease. Vehicles in the lower price segments are likely to account for the majority of growth. The price level in China is expected to be the same as in the second half of 2024 and is therefore lower than in the first half of the previous year. In the USA, the positive market development is expected to continue in view of the robust economic situation. In Europe, growth is expected to be driven by electrified vehicles due to stricter CO2 regulations. Full-year rev- enues per vehicle in the Automotive segment are expected to be in line with last year’s figure. The situation in the raw material markets is expected to improve further in 2025. However, currency effects are having a negative impact on earnings, leading to an overall negative impact on earnings compared to the previous year. The challenging situation in the supplier environment and the im- pact of inflation in previous years are expected to continue to re- sult in increased support measures for the supply chain. The anti-subsidy tariffs imposed by the EU in 2024 on battery- powered electric vehicles from China, against which the BMW Group has submitted a legal challenge to the European Commission, will have a negative impact in the mid three-digit million euro range on the financial year 2025 results and are in- cluded in the forecast. While the Chinese government could po- tentially implement countermeasures as the year progresses, they are not included in the forecast. The tariff increases imposed by the new US administration on imports from China (a 20% tariff on all products imported from China) and the Chinese government’s countermeasures (includ- ing a 10% tariff on imported vehicles with engine sizes over 2.5 litres) will have a negative impact on earnings in the low three- digit million range and are included in the forecast. US tariffs will have the biggest impact on vehicles exported from the United States to China, as well as on production parts and components imported from China to the United States. On March 4, tariff increases by the US administration on imports from Canada and Mexico of 25% came into effect. These will have a negative mid-three-digit million impact on the results and are included in the outlook. The outlook also includes tariff increases on steel and aluminium imported to the USA with a high-double-digit million negative im- pact on earnings. The BMW Group has thus factored into its outlook for the 2025 financial year the effects of all tariff increases that had come into force as of 12 March. Given the volatile geopolitical situation, it is possible that tariffs maybe be reduced or further increased dur- ing the financial year. The situation in the Middle East remained tense throughout 2024. However, in January 2025, Israel and Hamas reached an agreement on the initial phase of a ceasefire with a six-week lull in hostilities. Negotiations are currently underway to extend the ceasefire. As in the 2024 financial year, this conflict does not have a significant effect on the BMW Group’s operations at pre- sent since the Group does not operate directly in the region. Our outlook does not account for any further escalation of the situa- tion.