Bayerische Motorenwrk Ord

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

Thank you, Max. Good morning, ladies and gentlemen. In the third quarter of 2025, the BMW Group continued its strategic course and maintained its global market position. But before we dive into the details of the quarter, I would like to directly address our communication from October 7th. You all know the BMW Group as an ambitious company. We have always focused on identifying opportunities and realizing market potential, and our success demonstrates that this is the right approach. In 2025, despite all known challenges, we were confident in the fundamental potential of the Chinese market. Our planning scenario was fully confirmed during the first six months. with a performance on the level of the second half of 2024. For the second half of this year, we assumed we would see growth momentum. However, at the beginning of the fourth quarter, we observed that this momentum had not materialized to date. So, for the remainder of 2025, volume stabilization rather than volume growth now appears likely. Accordingly, We have adjusted our planning and now anticipate a consistent monthly run rate in China in line with the first half of 2025. In addition, we have introduced measures to support the profitability and liquidity of our dealers in China. The measures will also have an impact on our Q4 profitability. The consolidation of our dealer network in China is progressing to plan. Ladies and gentlemen, with respect to tariffs, The BMW Group has been fully transparent throughout the year concerning the impact on our 2025 financial results. Our original guidance given in March, as well as our updated assessments in the Q1 and Q2 reporting, were based on certain assumptions. As mentioned in our ad hoc announcement, these assumptions were not fully realized as expected to date. We now anticipate a tariff-related headwind of 1.5 percentage points on the auto EBIT margin for the full year. I will share further details on our full year outlook later on, but now let me walk you through our Q3 figures. Group earnings before tax totaled over 2.3 billion euros in the third quarter and exceeded 8 billion euros year-to-date through September. Compared to the first nine months of 2024, this represents only a slight decrease of 9.1%. A notable achievement in light of the current developments in the automotive industry. And for the full year, we also expect a decrease in the single-digit range only. This represents a full-year group profit before tax of approximately 10 billion euros, despite the significant burden of higher tariffs. Excluding the impact of tariffs, pre-tax profit even exceeds the 2024 figures. Within the BMW Group ecosystem, every segment contributes to our overall success. The reported Group EVT margin stood at 7.2% in the third quarter and 8.1% year-to-date through September. The reported auto EV margin fell within our full-year target corridor for both Q3 at 5.2% and year-to-date through September at 5.9%. Ladies and gentlemen, as you know, the BMW Group is always transparent in its reporting and we consistently focus on communicating our published figures. For better comparability within the industry, allow me nevertheless to provide a few additional details regarding our operational performance in the automotive segment. First, AutoEBIT includes the depreciation resulting from the purchase price allocation of BVA. Excluding this depreciation, which amounts to approximately 1.1 percentage points, the quarterly margin would be 6.3%, and the nine-month margin would be 7.0%. Second, auto EBIT also includes the burden of extra tariffs, which amounts to around 1.75 percentage points in the third quarter and 1.5 percentage points through September. So this impact should also be added for a fair comparison of our EBIT margin. Q3 deliveries to customers at group level increased solidly by 8.7% year on year. After nine months, the share of all electric vehicles reached 18% of total sales. And with a share of 26.2%, more than one in four vehicles sold globally was electrified, meaning either a BEV or a plug-in hybrid. Let's now take a look at how the automotive segment performed across key matrix. Deliveries of BMW, Mini and Rolls-Royce vehicles to customers reached 588,000 units in the third quarter. In Europe, sales grew by 9.3% and in the US by 24.9%. In China, retail sales did not meet our expectations with deliveries at previous year's level. After nine months, Global retail sales approached 1.8 million units, representing a slight increase of 2.4%. This clearly demonstrates the strength of our global business model, the sales performance in Europe and the US, more than compensating the challenges in China. Sales of all electric vehicles exceeded 100,000 units for the sixth consecutive quarter. Q3 revenues in the automotive segment amounted to 28.5 billion euros. reflecting a slight increase of 2.4% year-on-year. Adjusted for currency translation effects, the increase was 6.4%. Segment EBIT amounted to approximately 1.5 billion euros in Q3 and 5.1 billion euros from January to September. A reported EBIT margin including the negative impact of BBA, PBA and tariffs, as mentioned, came in at 5.2% for the quarter and 5.9% as of September. That brings me to my next slide, taking a detailed look at our operating result of the third quarter year on year. Automotive gave an increase by around 900 million euros compared to Q3 2024. As anticipated at mid-year, changes in currencies negatively impacted EBIT by 500 million euros, while raw material positions remained neutral. The net effect of volume, model mix and pricing resulted in a negative impact of 300 million euros in the third quarter compared to the previous year. Both volume and model mix provided a tailwind, while pricing was a headwind. This is particularly evident in China, where we see price pressure across all segments. Furthermore, since the end of June, Chinese banks have significantly reduced dealer commissions. While this led to a certain increase in transaction prices, as expected, it could not offset the negative impact of the lower commission revenues for dealerships. Consequently, we implemented dealer support measures in August to strengthen dealer profitability and liquidity. Ladies and gentlemen, in line with our planning, we will continue to decrease our operating costs in 2025 and beyond. The strength is once again reflected in our figures for the third quarter. Research and development expenses decreased by about 300 million euros compared to the prior year quarter. Group R&D expenditure totalled 5.9 billion euros as of September. This remains significantly below last year's level, despite extensive product initiatives and intensive preparations for the first model of the Neue Klasse. The R&D ratio, according to the German commercial code, stood at 5.9% after nine months. Selling and administrative expenses decreased by around 200 million euros compared to the previous year. These nominal cost savings of 500 billion euros more than offset the negative impact from volume, model mix and pricing. Other cost changes provided a tailwind of around 1.2 billion euros compared to the third quarter of 2024. This development results mainly from three areas. On the one hand, warranty expenses were significantly lower year on year. In Q3 2024, we fully recognized the necessary warranty provisions for the integrated braking system. On the other hand, tariffs had a negative impact of around 1.75 percentage points on the auto avid margin in Q3. The majority of the improvement and other cost changes in Q3 results from the positive development of manufacturing costs and material costs. So overall, we reduced costs by over 1 billion euros in the third quarter and by approximately 2 billion euros year-to-date through September. In addition to EBIT, tariffs also affect free cash flow. While refunds are recognized in EBIT, cash will rather be recognized in 2026 than in 2025. This negatively affect free cash flow through September, and the timing effect alone will impact free cash flow for the full year by a high three digit million euros amount. Free cash flow in the automotive segment totalled 343 million euros in the third quarter. We start with earnings before tax, which amounted to 1.4 billion euros. The net change in working capital contributed positively to the free cash flow by around 300 million euros. The negative net effect of capital expenditure and depreciation impacted the third quarter by 300 million euros. The CapEx ratio was 5.2% in the third quarter and 4.4% for the first nine months. Following the peak in 2024, CapEx will decrease for the full year 2025. The CapEx ratio is projected to remain below 6%. Changes to provisions negatively impacted free cash flow in the third quarter by approximately 500 million euros. This was primarily due to the consumption of warranty provisions. The change in the position other amounting to around 600 million euros reflects the development of a set of various topics, including income taxes paid. After nine months, free cash flow in the automotive segment stands at almost 2.7 billion euros. For the full year, we now target a free cash flow of over 2.5 billion euros compared to the original forecast of over 5 billion euros. This is driven by two factors. Lower than expected earnings for the full year and tariff refunds that we now expect to receive in 2026 instead of 2025. We remain committed to shareholder returns using both dividends and share buyback. Despite the lower free cash flow outlook, we will maintain our dividend payout ratio of 30% to 40%, and we will continue our share buyback program as announced. As a result, the anticipated shareholder return for the financial year 2025 will exceed free cash flow in the automotive segment. Let's now turn to our financial services segment. Financial services is a key component of our customer journey and an important part of our integrated value chain. As a vital element of our financial operating model, the segment contributes consistently to our group profit. New business grew significantly during the third quarter, primarily driven by the changed competitive environment in China. This contributed to a slight year-on-year increase of 1.9% in new leasing and financing contracts concluded with retail customers over the nine-month period. New business volume increased by 4.2% to 48.5 billion euros. The penetration rate for lease and loan offerings rose by 4.1 percentage points to 46.4%. Segment earnings amounted to more than 1.8 billion euros, a year-on-year decrease of 14.4%. The decline is primarily attributable to the lower income from the resale of end-of-lease vehicles, as well as a tax payment in the second quarter resulting from a revised operational tax assessment for prior years. Resale income remains positive on a portfolio basis. The credit loss ratio across the entire loan portfolio remained low at 0.26%. In the motorcycle segment, deliveries increased solidly by 5.7% in the third quarter year-on-year. EBIT for the third quarter totaled €60 million, resulting in an EBIT margin of 7.9%. Let's now turn to our outlook for the 2025 financial year. Four weeks ago, we confirmed that the auto EV margin will remain in the guided corridor of 5-7%, more specifically in the range of 5-6%. We also confirmed that deliveries in the automotive segment are expected to increase slightly. At the same time, the BMW Group adjusted its guidance for the following two key performance indicators. First, group profit before tax, which we know now anticipate to decrease slightly compared to 2024. And second, return on capital employed in the automotive segment, which is now expected in a corridor between 8% and 10%. In the motorcycle segment, deliveries are now expected to decrease slightly, whilst the EBIT margin range is confirmed between 5.5% and 7.5%. In the financial services segment, we confirm a return on equity in the range of 13% to 16%. Ladies and gentlemen, we have invested early and significantly in the future of our company in line with our long-term strategy. Our technology clusters are ready, paving the way for the broad deployment of innovations across our complete product portfolio. Our Gen 6 battery technology will shortly hit the market and support profitability with cost savings of 40 to 50% for the battery pack. After reaching their peak levels in 2024, we are reducing both CapEx and R&D as planned. We are also maintaining our consistent management of operational costs. This is reflected in our figures for the third quarter and through September, and it will continue to be visible going forward. With our highly attractive products in the Neue Klasse, we have the right levers in place to continuously strengthen our global market position today and in the future. We believe that our 2025 profitability stands out in the current business environment with a pre-tax profit decline only in the single-digit percentage range year-on-year. And with our strong balance sheet as a solid foundation, we will deliver consistent returns for our stakeholders.

Thank you. Thank you very much, Walter. Now over to our CEO, Oliver Zipse. Please go ahead.

Ladies and gentlemen, good morning. For the BMW Group, several key strengths have long formed the foundation of our strategic course. Our global footprint, our technology-neutral approach, our premium multi-brand strategy and broad portfolio across all relevant customer segments, and our ability to identify the potential of new technologies and bring them to the road in each major region. This strength gives us flexibility and make us resilient, and we are benefiting from them now. As a global company with global brands, we are used to dealing with varied conditions and unpredictability on the ground in each market. We recognize the current dynamics in the automotive industry, major transitions in innovation, operating with a global supply chain, a shifting geopolitical framework with trade impacts such as tariffs, as well as a rapidly evolving market in China, to name but a few. We remain focused on our long-term trajectory while using our flexibility to adapt to the changing dynamics and are tackling them head-on. This is what has always set the BMW Group apart. Our business remains on track and healthy. As Walter just shared, this is underscored by our Group EBT result over the first nine months, demonstrating the performance of the entire business, including our sales development. Despite the challenging market dynamics in China, our overall global sales posted year-on-year close of 8.7% in the third quarter. Excluding China, it was 12.2%. Through September, sales in Europe were up 8.6% compared to 2024, while sales in the United States grew by 9.5%. These strong results helped compensate for the developments in China. Electrified vehicles and M vehicles both drove global growth. With our technology-open approach and multiple premium brands, customers find products that fit their wide range of needs and tastes. In the coming months, we will take this to the next level with the introduction of the Neue Klasse. Just two months ago, at the IAA Mobility here in Munich, we unveiled the BMW iX3, the first vehicle of our Neue Klasse. The response was tremendous, from visitors and fans from across the globe, media, analysts and political stakeholders. A few weeks later, we celebrated the official opening of our new plant in Debrecen, where production of the iX3 is now underway. We have started taking customer orders for the car, which have exceeded our expectations. Just looking at Europe, We see orders already extend several months into 2026 already. This confirms an exceptionally positive start of the vehicle. The Neue Klasse is BMW at its best. And starting with the iX3, it will set new benchmarks from the performance data and revolutionary digital interface to its sustainability approach. The BMW iX3 offers a range of more than 800 kilometers in the WLTP cycle. And thanks to the ultra-fast charging capability, the peak charging power is up to 400 kilowatts. And that means in just 10 minutes, the iX3 can charge enough to drive more than 370 kilometers. The fully immersive digital experience will bring UI UX to a whole new level. With the BMW panoramic iDrive, drivers can intuitively keep their eyes on the road while all necessary information is perfectly in queue. With the BMW iX3, we will also introduce a new generation of driver assistance systems. The BMW Group is the first car manufacturer in Germany to receive approval for assistance systems in accordance with the United Nations Regulation for Driver Control Assistance Systems, DCAS. This approval enables the BMW Group to offer motorway assistance with level 2 hands-off function in numerous other models and countries in the future. This also covers an extended range of functions. More innovative assistance functions for urban driving will follow. In terms of sustainability, the iX3 is explicitly focused on conserving resources and reducing the model's environmental footprint. throughout the supply chain, production, use phase and recycling. In line with the principles of design for circularity, the iX3 is made up of one-third secondary raw materials. Moreover, Plant Debrecen is the first BMW Group car factory that operates and produces vehicles without using fossil fuels such as oil and gas under normal operating conditions. Overall, the IX3 is a perfect example of our strategy of reducing CO2 wherever we have leverage. This will help us reach our near-term target to reduce our carbon footprint by at least 40 million tons CO2 by 2030. Since 2020, we have been fully committed to the Paris Climate Agreement with the target of achieving net zero by 2050. The next Neue Klasse model, which we tease that the IAA is preparing for its launch, the new BMW i3. With the eighth generation of the 3 Series, we will bring the Neue Klasse and its technology clusters into the core of the BMW brand. Production of the i3 will get underway at our main plant in Munich in the second half of next year. Other locations in our international production network will follow with production of three series variants. Throughout 2026, we will show how the Neue Klasse technologies will be integrated into further models, such as the 7 series and the X5. And by 2027, we will put 40 new models and model updates with Neue Klasse technology and design language on the road worldwide. This all-new BMW generation will provide an enormous boost to our already broad and popular portfolio, with technology solutions tailored to customers in their markets. And this applies especially to China. The Neue Cluster products we will launch in China are developed together with our local engineering teams and Chinese partners in the market for the market. Our Neue Klasse architecture allows us to integrate local tech stacks from leading Chinese tech players into our own ecosystem. This gives consumers access to innovations and features they are used to, including solutions from Alibaba, Banma, DeepSeeks and Momenta. With the Neue Klasse, we are again demonstrating our strengths in mastering system complexity, integration and efficiency. We know what our customers want and identify trends in individual markets early. The result are products that perfectly integrate the best technologies, both in-house and with partners across regions to offer the best product substance to our customers. What makes the NOEI cluster so unique is that we are rolling out the technology cluster across the entire portfolio, regardless of the drivetrain. Our technology-neutral approach continues to show its success and allows broad market access as consumer preferences shift. At the same time, we are making progress in decarbonization in the here and now. After nine months into 2025, group sales of all electric vehicles are up by 10%, resulting in a best share of 18%. PHEVs grew nearly 28% year-on-year, delivering an overall electrified share through September of 26.2% globally. Europe showed particularly strong growth, with BEFs reaching over a quarter of total sales, while BEF and PHEV sales combined for an impressive 41% share. Europe will also be the primary driver of our BMW iX3 sales in 2026. Thanks to this solid result, we are well on course to reach our CO2 fleet target for the year, just as we have consistently done for the past several years. For us, it has long been clear that we would meet the targets for 2025, and importantly, without penalties, cooling or averaging. The success with our technology-neutral strategy also gives our voice weight in the ongoing discussions regarding the EU's targets. We have reached our climate targets by following market demand and customer needs and by continually optimising all private trend variants. It remains critical for Europe to revisit the targets for 2030 as well as for 2035. Setting an end date to a specific successful technology will lead to a massive shrinking of the industry as a whole. It will harm European industry and also create dependencies that are unwise in the current geopolitical dynamic. To achieve climate goals and create effective CO2 regulations, we must take a comprehensive view. One that accounts by using a life cycle assessment approach for the full carbon footprint of the vehicle and its value chain. And that also values climate neutral fuels such as AVO 100. That's a holistic framework which reflects various market needs and uneven infrastructure development while safeguarding Europe's value chains, jobs and industrial strength. And above all, it delivers genuine climate protection and real reductions in CO2. Companies should be free to deliver the solutions, taking customer demands and needs into account, while adequately investing in new paths and technologies to achieve the EU's climate goals. In this context, the BMW Group is very skeptical about the EU's planning greening the fleet's regulation as it does not consider current market realities. Commercial fleets rely on high vehicle availability with high mileages. The currently inadequate charging and hydrogen refueling infrastructure will not be guaranteed in all member states by 2030 either. Further fleet mandates and additional regulations that exclude individual technologies are not necessary to achieve the CO2 targets. Moreover, they hinder technological development and introduce harmful market distortions contrary to customer preferences. Here also, we advocate for a holistic and technology-neutral approach. Ladies and gentlemen, we are tackling the challenges in global markets head-on leveraging our strengths and implementing our long-term strategy. We've made significant investments and have created the right operating framework to deliver. Our flexible global network, our tech open strategy, our focus on innovation and our ability to master technological complexity sets us apart. Over the coming months, we will deliver as promised. Starting with the iX3, we will rapidly deploy our ambitious strategy one vehicle at a time around the globe. We will continue to lead with product substance and solutions that meet our customers' needs. We therefore remain optimistic as we close out 2025 and move forward to 2026. Thank you very much.

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

Colleagues, we shall now turn to the second part of our quarterly conference, and we'll continue this in German with interpretation. As always, you get some technical information before we take the first question. Ladies and gentlemen, We're now beginning the Q&A session. If you'd like to ask a question, please use the raise your hand function at the bottom of your screen. If you have dialed in by telephone, please push the star button and nine. And in the order received, you will then be given the opportunity to ask a question. As soon as your name has been announced, you can ask your question. To withdraw your question, just put down the hand using the function in the Zoom app. If you've joined by telephone, press again the star button and nine. Thank you and just a moment for the first question. The first question comes from Christina Ammann, Thomson Reuters. Please unmute your microphone now. Good morning to Munich. Thank you for your statements. I have a couple of questions. I'd like to start with Nexperia. I bet that's the question most will ask. What's the supply situation with semiconductors? What are the perspectives for production? What are the perspectives in the short, mid and long term? What is BMW doing in order to solve that situation? Second question regarding investments. Mr. Matt, you said that investments will be reduced according to plan, both for development and for production facilities and similar. So could you explain that a little more? Since in that context, now I look into the US. Towers are an issue for BMW. These repayments outstanding are a reason for your lowered forecast. What other steps has BMW taken in order to improve the situation? Are you planning to relocate more production into the US? And now a first glance into the year 2026, what are the prospects for that year? Thank you. Thank you, Ms. Aman. I guess that covered pretty much everything that we need to answer today. Let's start with Nixperia, Mr. Tzipse. Good morning, Ms. Aman. The question is not entirely unexpected, but let me answer strategically. in global, being at home in global supply chains. I mean, that's something we've practiced twice, once during Corona and then during the semiconductor crisis two and a half years ago. So it doesn't really hit us as a surprise. To get back to this particular case, all I can say is that we are in close contact with our direct and indirect suppliers, the ones further down in the supply chain. And We continue to assess the situation, so we do this several times a day in order to identify potential supply risks early and, if necessary, to then take required or appropriate measures. Currently, production and market is going well. But it is a volatile situation, and this is why we are making use of all possible measures to keep up our production as good as possible. What is important, Nixperia is not a direct business partner of the BMW Group. but it supplies our direct suppliers and we support them in validating and activating alternative supply opportunities. Thank you for the question. Then part two, investment. Baltan, please. Hello, Ms. Aman. Our long-term plan had been planned early, so from, we were able to talk about that invest peak in 2020 and a peak is a peak and it's not a level. So it's always been clear that in 2025 and six and 27, we would gradually reduce that back to our strategic corridor. And that's reflected in our actual figures. We've done our homework, we've had to invest in CapEx and R&D, and we carry that out. Now regarding the tariffs, the requests or the applications for refunds have already been filed. Otherwise, we continue to optimize the way that we announced it in the last two quarters as well. And we're doing everything we can in order to reduce costs for 2026. Well, we'll talk about that next year, March at the Banshee press conference. Thank you. Okay, let's take the next question. Next question. Christopher Meyer from DPA. Please unmute your microphone now. Well, good morning. I can take it from there, the refunds. The applications you filed, what are the quantities we're talking about? How much will you be refunded? Then another question relating to figures. The support for dealerships in China, can you give us a dimension here, an idea? How much did that cost you? Thank you. Thank you, Mr. Röhmeyer. Alta Merkel, please. Hello, Mr. Röhmeyer. Well, the application for tariff refund, we filed it. You do it once a quarter. We filed that retrospectively for August and September. Since end of September, The most recent tariffs applies 15% in the US and the other refunds for production support That's 3.75%. We can also file applications for a refund of that. And as you'll know from our ad hoc or guidance, we're assuming it's a high three-digit million amount if you add up all of them, be it refunds or payback of overpayments. And then you asked about support for dealerships. That's a low three-digit million amount. verify this and profitability and liquidity as well as operations can this way be maintained in China. Thank you. Next question, please. Next question, Stephen Wormwood from the Wall Street Journal. Unmute yourself now, please.

my questions. Firstly, just a quick yes or no one on the next period situation. Are you seeing an easing of the situation now or not? And then secondly, just wondering if you can give a bit more guidance on the outlook for tariffs going forward. So 175 basis points in the quarter. 150 for the full year do you i mean is is 175 the new normal um or do you expect the uh the the impact to come down as you head into 2026 um so yeah those were the two questions thank you very much

Well, Stephen, as we already said earlier, we're in close contact with our suppliers and we are really continuously assessing the situation in order to early identify potential supply risks and then to take suitable measures. So this is something that's happening on a basis of several times a day. But what's also important to us, and this is what we already talked about earlier, and to add to this, We are welcoming the positive signals coming from politics, so we're explicitly welcoming those. I think it is very important that all stakeholders in the economy and politics are aware of the fact that these are global supply chains and they will remain global, even if you take hedging measures, you will especially in semiconductor industry or the battery industry, no matter how you position yourselves, if you've got several suppliers, I mean, there'll always be some remaining dependency. And this is why we welcome it very much if politics recognize that, especially here in Germany, we do have these global dependencies and they also have a lot of benefits. Thank you. Maybe Walter, the outlook regarding the tariffs. Well, as I've said in my presentation, we're assuming 1.75 percentage points impact for the entire year. And of course, we're expecting that everything has been translated into laws that's been announced. So we're assuming also in terms of, you know, from the EU, we're expecting that the 0% import tariffs from the US into the EU will then be ratified and confirmed by the parliament. That's what we're assuming is going to happen. Thank you, next question, please. Next question is from Joachim Herr from Bersen Zeitung. Please unmute your microphone and push the buttons star and six. Good morning, I have two questions. Mr. Zipse, again on Nexperia, you said, In earlier cases, you were able to practice in Corona and also during the semiconductor crisis or where we have these bottlenecks. Can you briefly explain what you've learned from that or how you are able to better handle the situation this time? And the second question on China, sales in China minus 11% in the first nine months. So that's below your expectations. How do you react to that? Are you going to lower The capacities, are you reducing headcount as well? So how do you deal with that in terms of production? Thank you. Let's begin with Nixperia, Oliver Zipse and then Walter Mertl. Well, Mr. Herr, what I mean by that, when I say we have been able to practice all supply chains with BMW, begin with a commodity or with a mine, and then there's processing stages happening somewhere in the world. And then we've got the first levels of aggregation, the first refinements, and then until in the very end, this reaches our first tier suppliers. And we have a high degree transparency now regarding all components of the vehicle. So, depending on the type there's between 12 and 18,000 individual components involved, and we now have a pretty good overview of the value chain, and this is why we know fairly early when there could be a bottleneck and before that even begins, we can either increase our inventory already or we can try and be more flexible. Do we always succeed? Obviously not, because there's just too many components involved. But in a case like Nixperia, I think we are fast enough. It's also about speed, about acting quickly. Because when we can act quickly, then we can minimize the effects. But of course, we cannot entirely escape the situation. But as I said earlier, at the current point in time, our plans are all full up and running and everything else remains to be seen. Then Sales in China, Walter. Well, if you look at the development of the quarter compared to the previous year in China, then you'll see that in Q1, there was a decrease by 70%, second quarter was about 15, and now third quarter, nine months, we're at 11%. So gradually, We're doing less bad news, to put it that way. So what are we doing? Well, we're just about to right-size our dealership network. So we're consolidating it and we're restructuring. Doesn't mean that we're closing certain shops, but we're also... We've got some user service locations. We've also opened up new ones. And we'll be done with all of that by the middle of next year, so much on the sales side. And that obviously helps to increase or support data profitability. And that way, we'll be able to sell more. And with Neue Klasse, I'm sure they'll do a great job. And now in terms of the production, of course, We've got a tight grip on costs and in terms of head count, we've got fixed time contracts in the joint venture and depending on capacity, these contracts will either expire or they'll be renewed. So we can handle everything quite flexibly, both in sales and production. Next question, please. Next question. Felix Stippler, Handelsblatt. Please unmute your microphone now. Good morning. I've got two questions on Neue Klasse. Mr. Zipze, in your statement, you said demand is already exceeding expectations. Now I'd like to know what were your expectations and by how far were they exceeded? And then Mr. Mertl, you just mentioned China and Neue Klasse. Well, What do you expect? How much less bad would it be because of Neue Klasse? And then I've got two general questions regarding the state of the automobile industry. Volkswagen, Mercedes, they've got pretty bad figures. You're appearing a little more stable. Are you still worried about the state of the German automotive industry? And if you look at the geopolitical situation and sales in China, do you think that European carmakers... will have to bet more strongly on Europe, where you also grew strongly. Thank you, Mr. Stibler. I think I'll pass it to Ola Zipsen. Well, with Neue Klasse, Our plan was with the IX3 to set a new benchmark and the feedback and customer interest is really huge. It's very positive. This concerns the entire concept, but also individual performance data, the design, the user concept. And this is also reflected in orders in Europe. They are well above our expectations. For example, one out of three orders received September in Europe was an IX3. I mean, you get the idea. We've got 15 all electric vehicles in our portfolio right now. And in the next few days, the first multipliers, series vehicles will be tested and there'll be comprehensive reporting, which will give us additional tailwind. But that is not supposed to be the end because in 2026, we'll also be celebrating the BMW i3, not the iX3, but the i3. Just today, so that'll be the next premiere. We're just electrifying the heart of BMW, or we're continuing on that journey that is. Do we need to be worried about China? Well, let me combine that with the question about China. And you see Neue Klasse, because it's a global product. Sure, Neue Klasse will also be available in China. It'll there be enriched by digital solutions that are made in China and for China with the partners we have there. So it'll be pretty much a Chinese product. It'll be a long wheelbase version. So we're not really that much worried that there won't be any demand for that product. No, on the contrary, what you're seeing in Europe now, we're expecting the same to also happen in China. Do we need to worry about the German automotive industry? Well, well, It's not our job to be worried. It's our job to look for attractive products and cater for the markets. And I gave you the figures before in Europe, we're growing by almost two digit growth rates and we're gaining market share. So that general concern for everything in the automotive industry, I don't think you need to be generally worried, obviously. Being competitive in that environment, speed, momentum in adjustments, that's what's now more important than it was a couple of years ago. So you just have to switch up the gears. And do European OEMs have to bet more on Europe? Well, it's always good to be strong in your home market. You can see our growth here is the strongest apart from the US and the rest of the world. The home market is... always has a very special meaning, but that should not lead to a picture where we should actually withdraw from other regions. I mean, the overall picture shows if you wanna be resilient, you have to be strong in all regions and for BMW that has always applied and it will also apply in the future. Thank you, Oliver. Thank you, Mr. Stippler. Can I ask for the next question, please? Next question comes from, Frank Volk from Automobielwoche. Please unmute your microphone now. Good morning, everyone. In connection with Nexperia and the dependencies, battery technology, rare earth, I have a question on global supply chains. In connection with localization, that's, I mean, that's been a success factor for them. The question is, has that system now reached its limits? Where you're becoming vulnerable in terms of industrial policy, as you said, there's always been supply bottlenecks and we can handle those, but doesn't it now have a new quality? how that is used as an instrument in global politics. How can you better prepare yourself for that? I think you also mentioned this in your statement that you want to increase your flexibility in a supplier network. Can you give us some insights in which direction this might be going? And then a question on the EU block. Do you have any hope that your voice will be heard in that context, that the EU will actually postpone that final date? What is the status of the negotiations there? Thank you, Mr. Falk. We've understood all of your questions. I'll pass both questions to our CEO, Oliver Zipse. Mr. Falk, the dependencies, maybe you need to ask that question slightly differently. How do you best get by having these dependencies? You know, we depend on all sorts of things. We depend on politicians, on supply chains, global value flows, but ultimately we also depend on our customers. So the question about the dependencies, for me, that, you know, I always, I tend to think, why do you even ask that question? We depend on all sorts of things. And the core is, Who is best in managing these dependencies in such a way that it turns into a profitable business model? The question is not how do I reduce dependencies, but the question is how do I make use of them? So in the end, I have a profitable business model, a business model that's resilient and future oriented. It essentially means you need to manage your dependencies. You will never be able to get rid of them. That's not possible. In the supplier side, if you run into situations where there's a monopoly, then you have to make sure that you turn the monopoly into a legal play. So instead of one, you need two or three partners. And the political dependencies, you need to talk to people. And let me combine that with your second question. CO2 regulation, which only looks at the tailpipe, and they're hoping to bring this down to 0%. And this does not reflect, it doesn't reflect the reality. It'll actually lead to the opposite. I don't think this will achieve any substantial CO2 reductions because the customer and the customer has the greatest dependency we have. The customer always has the possibility to just continue driving their old car. But I think with the lifecycle approach, we've actually chosen a very good approach. And we can be much faster if we manage this type of dependency in a better way, Mr. Falk. And then the dependencies, especially when it comes to semiconductors, when it comes to cloud-based digital services, when it comes to batteries, all that matters is to make these more resilient. Reducing these dependencies would directly lead to a situation in which we can no longer innovate and in which we would no longer be competitive and if you don't recognize this, then you probably have a greater problem in taking your successful business model into the future. But what's also important for me is that you recognize these dependencies. And this brings me to the Brussels regulations. Then I will not take that technology as the only admissible technology where I have the greatest dependency. I'm talking about dependency in terms of batteries, because most of that is outside of Europe. So presumably, that's the largest step you can take. Don't just bet on one horse. And this also applies to politics. Thank you, Oliver. Thank you, Mr. Falk. The next question, please. Next question is by Sebastian Ash from Financial Times. Please unmute your microphone now.

Hi, everyone, and thank you for the information you've provided to us so far. Mr. Zipser, you fairly strongly criticized the idea of stronger regulation of corporate fleet emissions in the European Union. Now, this seems to be almost being prepared as an exchange for a weakening of the 2035 target for consumers more generally. I mean, could you just give me your thoughts on how you would see or how you would look at a situation in which on the one hand, 2035 was weakened, but on the other hand, the corporate goals were strengthened once again? Thank you.

Thank you, Oliver, please. Thank you for the question. Now to clarify this. We're not asking for the targets to be weakened. We're asking for a different regime as to how these targets can be achieved. The way we put it, these targets can be achieved much more easily. if they don't just focus on tailpipe emissions, and this applies to the fleet as well as to private cars, because currently all that's done is they're measuring tailpipe, but that's wrong because it leaves out of account all other possibilities of reducing CO2 within that regulation. For example, it doesn't matter if today an OEM buys green steel, that's not part of today's fleet regulation. It's irrelevant, and we believe It is important. I mean, the greening of supply chains, where does the green power come from? That should be part of that regulation to provide incentives. What we are asking for is a new regulation that is more effective and greening the fleet. I mean, which is pretty strong. It's pretty strong in Europe and almost all major European countries. There's very large vehicle fleets. And to prescribe in that field, which technology has to be applied, regardless of the framework conditions is at least as wrong as the tailpipe regulation. The better thing to do would be to prescribe that CO2 regulation is such that you need to have improvements every day. And then the reporting CSRD that should be combined with the fleet regulation. BMW Group today already reports its scope one, two, and three CO2 reductions and the success we have. We're continuously going down. All forecasts show that we are dramatically reducing our CO2 footprint, scope two, three, and upstream. But usually that is irrelevant. Although we're reporting this, So that is in a way a little absurd. You're reporting something, but it has no effect. And we just want to combine those two in this way to arrive at a much better solution instead of having single solutions. And the current regulation on the corporate fleet actually achieves the opposite because it prescribes something. In that case, it tells companies what they have to do regardless of whether the CO2 reduction is actually happening or not. Thank you, Oliver. We've now got three questions left. Well, three. So next question, please. Next question. That's Regina Imklär from Passau Neue Presse, Mediengruppe Bayern. Please unmute your microphone now. Good morning. I have a question that relates to becoming climate neutral. Depresin is the first fossil-free plant. Will further sites follow? Have you got something in a pipeline here? And next question is about less costly models. People say that German cars are too expensive. Is BMW working on a more low-cost alternative? And then next question, That's about the dealer network. EMW wants to switch to an agency model. Is that still what you're planning to do, or are you going to postpone that? Thank you. Let's begin. Thank you, Ms. EMCLIR, DebitGen, and more inexpensive models, and then the agency model that'll be ultimately. Oliver, please. Well, Ms. Imkler, I explicitly like to thank you for your question. Deppertsen is the first fossil-free plant with clearly reduced CO2 emissions and targets also. And these targets, well, we've got those for every existing site. And I like that question because the reduction that we're doing there, by the way, we're doing that on our own free, because we are really convinced climate protectors. But this has no effect on the fleet regulation. Do you understand whether we do this or not? Except for the fact that we're reporting it, it has no effect whatsoever. And this is why we're asking for a new regulation. So that's something like Depperson or something what we do here in Munich, where we're switching entirely to electrified vehicles, that this actually has a value and something that's reflected. So if somebody makes more efforts, you should have a higher chance to avoid a possible penalty payment. So thank you so much for your question. And as you know, we're right on track for fulfilling all of the targets, scope one, two, and three, including CO2 fleet. targets. So we're really doing extremely well. Now, less costly models, well, they already exist today. The all electric ones and the hybrid ones, and also the ICEs, that's the Mini brand. The Mini brand is highly attractive. And the only thing that makes these cars expensive at the moment is a penalty custom tariff of more than 30% for the parts of the cars that are manufactured in China. the European Union artificially makes these costs more expensive. And that is obviously to the detriment of the consumers. That's why we think that this regulation is highly detrimental to our customers, namely to be able to offer the cost or more inexpensive cost to our customers. Then the status of the agency model. Yes, happy to answer that, says Mr. Merthel, because with Mini direct sales in Europe. We started that quite successfully in January, 2024. And the last repeat markets went live this year in the summer of 2025. And this is quite successful. All is going according to plan in the first six months, 24. Some fine-tuning was still necessary. This is why it was a staggered go-live, and this is a successful concept that we will also roll out for BMW. It'll take a bit of time. We need to upscale it, and we need to prepare the contracts, finalize them for BMW. We will also introduce that in Europe. Thank you. Next question, please. Next question is from Thibault Madler from Liseko. Please unmute your microphone now. Good morning. I hope you can hear me. Yes, we do. We hear you. Thank you for taking my question. Actually, it's two questions. Is there already a price for Neue Klasse in China? And if not, could you just give us an idea of what the price will be? And then on steel tomorrow, We'll have the Steel Summit in Berlin. What are your expectations? Okay, we'll begin with the Steel Summit. Well, Mr. Madelang, the Steel Summit is something we welcome, of course. We welcome that politics has now recognized that supply chains resilience, competitiveness, that all of these are so important for central industries such as steel, but also chemistry or the automotive industry is highly relevant. So that's why we welcome this discussion. Of course, you need to protect yourself from unfair competition, but that doesn't mean you shouldn't do everything you can in order to stay competitive. And I think we need to continue to work on that. The industry as such, it applies to us also, but we need to have, you know, despite difficult framework conditions, we have to remain competitive. That's something that's got to be said in addition to all of these protective mechanisms that people also like to discuss. And then the prices for NeuClass in China, it's a very attractive product offering or will be, but we haven't actually fixed the prices yet, but of course it'll be quite competitive. Thank you, and it's time to the last request for the floor. Last question comes from Christoph Wurmeier, GPA. Please unmute your microphone now. Good morning, it's me again. Maybe a good question to finish off with because it's quite global. When I look at your figures, And what the outcome will be for the year, if you compare that to 22, it looks much worse. If I compare to the time before that, it's actually looking quite normal. 22, 23, that was a very special situation, obviously. Now, if I were to ask you now, crisis, is this now a time of crisis for BMW? Because in the industry, when we talk about a crisis, but now if you could answer that for BMW, are you in a state of crisis or is this normal? Oliver, please. You've never heard us speak of a crisis before. A crisis is if you don't know what to do anymore, that's a crisis. I think Corona was when we had a standstill in all plants. That was a crisis because we didn't know how that was going to end. We didn't know when we could reopen the plants, but in the last two or three years, You've never heard us speak out the word crisis and business results, they are as they are. I mean, we work for them hard every year. And in 2022, 23, there were always special effects. In 22, we had a special effect of 7 billion. That was when the 75% majority in BBA. In sports, we have a special effect, so that perhaps can't be compared. And in 23, there was the semiconductor situation, which reminds me of an experience. So every year is a little different. I don't really think you can compare the years directly. We're satisfied with what we're doing here in Munich. Could it be better? Yes, of course it could. the entrepreneurial job is to just, in the environment you find, you know, it's neutral. You just have to work with it. Never just talk about a crisis all the time. As you can see in Europe, individual mobility still has a very large demand in the market. And globally, it's even associated with growth. So we would not want to speak of a crisis in a situation today. Thank you, Mr. Römer. Thank you for the last question. I think that kind of rounds off our telephone conference today pretty well. So thank you, colleagues, for your questions. All the best to you. And I'm sure we'll see each other soon. Servus and goodbye.