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. 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 Amann. 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. Mertl, you said that investments will be reduced according to plan, both for development and for production facilities and similar. Could you explain that a little more? Since in that context, now a look into the U.S. Tariffs are an issue for BMW. These repayments outstanding are a reason for your lowered forecast. What other steps is BMW taking in order to improve the situation? Are you planning to relocate more production into the U.S.? Now a first glance into the year 2026. What are the prospects for that year? Thank you.
Thank you, Ms. Amann. I guess that covered pretty much everything that we need to answer today. Let's start with Nexperia. Mr. Zipse.
Good morning, Ms. Amann. The question is not entirely unexpected. Let me answer strategically. 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. 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. We continue to assess the situation.
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. It is a volatile situation, and this is why we are making use of all possible measures to keep our productions as good as possible. What is important, Nexperia 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. Walter, please.
Hello, Ms. Amann. Our long-term plan had been planned early. We were able to talk about that investment peak in 2020, and a peak is a peak, and it is not a level. It has always been clear that in 2025 and 2026 and 2027, we would gradually reduce that back to our strategic corridor. That is reflected in our actual figures. We have done our homework. We have invested 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 we announced it in the last two quarters as well. We are doing everything we can in order to reduce costs for 2026. We will talk about that next year, March, at the Balchy Press Conference. Thank you.
Okay, let's take the next question. Next question. Christoph Ruhrmeier from DPA. Please unmute your microphone now.
Good morning. I can take it from there, the refunds. The applications you filed, what are the quantities we are talking about? How much will you be refunded? 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. Ruhrmeier. Walter Mertl, please.
Hello, Mr. Ruhrmeier. The application for tariff refund, we filed it. You do it once a quarter. We filed that retrospectively for August and September. Since the end of September, the most recent tariffs apply 15% in the U.S., and the other refunds for production support as 3.75%. We can also file applications for a refund of that. As you will know from our ad hoc guidance, we are assuming it is a high three-digit million amount if you add up all of them, be it refunds or payback of overpayments. You asked about support for dealerships. That is a low three-digit million amount. To clarify this, profitability and liquidity as well as operations can this way be maintained in China. Thank you. Next question, please.
Next question, Stephen Wilmot from The Wall Street Journal. Unmute yourself now, please.
Thank you for taking my questions. Firstly, just a quick yes or no one on the Nexperia situation. Are you seeing an easing of the situation now or not? 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. I mean, is 175 the new normal, or do you expect the impact to come down as you head into 2026? Yeah, those were the two questions. Thank you very much.
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. This is something that's happening on a basis of several times a day. What's also important to us, and this is what we already talked about earlier, and to add to this, we're welcoming the positive signals coming from politics. 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 the 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. 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. As I've said in my presentation, we're assuming 1.75 percentage points impact for the entire year. Of course, we're expecting that everything has been translated into laws that's been announced. We're assuming also in terms of from the EU, we're expecting that the 0% import tariffs from the U.S. 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 Börsen-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 had these bottlenecks. Can you briefly explain what you've learned from that or how you are able to better handle the situation this time? The second question on China. Sales in China are 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? How do you deal with that in terms of production?
Thank you. Let's begin with Nexperia, Oliver Zipse, and then Walter Mertl.
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. 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. We have a high degree of transparency now regarding all components of the vehicle. Depending on the type, there's between 12,000 and 18,000 individual components involved. We now have a pretty good overview of the value chain. This is why we know fairly early when there could be a bottleneck. 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 are just too many components involved. In a case like Nexperia, I think we are fast enough. It is also about speed, about acting quickly. When we can act quickly, then we can minimize the effects. Of course, we cannot entirely escape the situation. 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. Sales in China, Walter?
If you look at the development of the quarter compared to the previous year in China, you will see that in Q1, there was a decrease by 70%. Second quarter was about 15%. Now third quarter, nine months, we are at 11%. Gradually, we are doing less bad news, to put it that way. What are we doing? We are just about to right-size our dealership network. We are consolidating it and we are restructuring. It does not mean that we are closing certain shops, but we have also got some user service locations. We have also opened up new ones. We will be done with all of that by the middle of next year, so much on the sales side.
That obviously helps to increase or support dealer profitability. That way, we will be able to sell more. With Neue Klasse, I am sure they will do a great job. Now in terms of vehicle production, of course, we have got a tight grip on costs. In terms of headcount, we have got fixed-term contracts in the joint venture. Depending on capacity, these contracts will either expire or they will be renewed. 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 have got two questions on Neue Klasse. Mr. Zipse, in your statement, you said, "Demand is already exceeding expectations." I would like to know what were your expectations and by how far were they exceeded? Mr. Mertl, you just mentioned China and Neue Klasse. What do you expect? How much less bad will it be because of Neue Klasse? I have got two general questions regarding the state of the automobile industry. Volkswagen and Mercedes, they have got pretty bad figures. You are appearing a little more stable. Are you still worried about the state of the German automotive industry? 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. Stippler. I think I will pass it to Oliver Zipse. Interpreter is not getting any sound right now. Walter is not getting any sound input. Can you hear me now? Mr. Zipse? Hello? Mr. Stippler? Mr. Stippler, are you still there?
I can hear you now. Thank you a lot. I'll try again. With Neue Klasse, our plan was with the iX3 to set a new benchmark. 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 future concept. This is also reflected in orders in Europe. They are well above our expectations. For example, one out of three orders received in September in Europe was an iX3. I mean, you get the idea. We've got 15 all-electric vehicles in our portfolio right now. 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. 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. That'll be the next premiere.
We're just electrifying the heart of BMW, or we're continuing on that journey. Do we need to be worried about China? Let me combine that with the question about China. 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. It'll be pretty much a Chinese product. It'll be a long-wheelbase version. 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? It's not our job to be worried. It's our job to look for attractive products and cater for the markets.
I gave you the figures before. In Europe, we're growing by almost two-digit growth rates, and we're gaining market share. That general concern for everything in the automotive industry, I don't think you need to be generally worried, but 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. You just have to switch up the gears. Do European OEMs have to bet more on Europe? It's always good to be strong in your home market. You can see our growth here is the strongest apart from the U.S. and the rest of the world. The home market always has a very special meaning. That should not lead to a picture where we should actually withdraw from other regions. I mean, the overall picture shows if you want to be resilient, you have to be strong in all regions. 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 Automobilwoche. 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, I mean, that's been a success factor for BMW. The question is, has that system now reached its limits? Where you're becoming vulnerable in terms of industrial policy. Zipse, you said there's always been supply bottlenecks, and we can handle those, but does not 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 supply and network. Can you give us some insights in which direction this might be going? And then a question on the EU bloc. 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. Volk. We've understood all of your questions. I'll pass both questions to our CEO, Oliver Zipse.
Mr. Volk, the dependencies, maybe you need to ask that question slightly differently. How do you best get by having these dependencies? 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.
The question about the dependencies, for me, that, I tend to think, why do you even ask that question? We depend on all sorts of things. 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? The question is, how do I make use of them? 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. On 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. Instead of one, you need two or three partners.
The political dependencies, you need to talk to people. 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%. 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, that's the greatest dependency we have. The customer always has the possibility to just continue driving their old car. 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. Volk. 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. If you do not recognize this, then you probably have a greater problem in taking your successful business model into the future. What is also important for me is that you recognize these dependencies. This brings me to the Brussels regulations. I will not take that technology as the only admissible technology where I have the greatest dependency. I am talking about dependency in terms of batteries, because most of that is outside of Europe. Presumably, that is the largest step you can take. Do not just bet on one horse. This also applies to politics.
Thank you, Oliver. Thank you, Mr. Volk. 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 have provided to us so far. Mr. Zipse, you fairly strongly criticized the idea of a 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 are not asking for the targets to be weakened. We are 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 do not just focus on tailpipe emissions. This applies to the fleet as well as to private cars, because currently, all that is done is they are measuring tailpipe. That is wrong because it leaves out of account all other possibilities of reducing CO2 within that regulation. For example, it does not matter if today an OEM buys green steel. That is not part of today's fleet regulation. It is irrelevant. 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 is pretty strong in Europe.
In almost all major European countries, there's very large vehicle fleets. 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 as such that you need to have improvements every day. Then the reporting CSRD, that should be combined with the fleet regulation. BMW Group today already reports its Scope 1, 2, and 3 CO2 reductions. The success we have, we're continuously going down. All forecasts show that we are dramatically reducing our CO2 footprint, Scope 2, 3, and upstream. Usually, that is irrelevant, although we're reporting this. That is, in a way, a little absurd. You're reporting something, but it has no effect.
We just want to combine those two in this way to arrive at a much better solution instead of having single solutions. 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. Three. Next question, please. Next question. That's Regina Ehm-Klier from Passauer Neue Presse, Mediengruppe Bayern. Please unmute your microphone now.
Good morning. I have a question that relates to becoming climate neutral. Debrecen is the first fossil-free plant. Will further sites follow? Have you got something in the pipeline here? Next question is about less costly models. People say that German cars are too expensive. Is BMW working on a more low-cost alternative? Next question, that's about the dealer network. BMW 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. Ehm-Klier, Debrecen, and more inexpensive models, and then the agency model that will be about a method. Oliver, please.
Ms. Ehm-Klier, I explicitly like to thank you for your question. Debrecen is the first fossil-free plant with clearly reduced CO2 emissions and targets also. These targets, we've got those for every existing site. I like that question because the reduction that we're doing there, by the way, we're doing that on our own free volition because we are really convinced climate protectors. These have 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.
This is why we're asking for a new regulation. That is something like Debrecen 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. If somebody makes more efforts, you should have a higher chance to avoid a possible penalty payment.
Thank you so much for your question. As you know, we're right on track for filling all of the targets, Scope 1, 2, and 3, including CO2 fleet targets. We're really doing extremely well. Less costly models? 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. 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 cars more expensive. That is obviously to the detriment of the consumers. That is why we think that this regulation is highly detrimental to our customers, namely to be able to offer low-cost or more inexpensive cars to our customers. The status of the agency model.
Yes, happy to answer that, as Mr. Mertl, because with MINI direct sales in Europe, we started that quite successfully in January 2024. The last few markets went live this year in the summer of 2025. This is quite successful. All is going according to plan. In the first six months, 2024, some fine-tuning was still necessary. This is why it was a staggered go live. 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, Walter. Next question, please. Next question is from Thibaut Mettler from Les Échos. 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 a Neue Klasse in China? If not, could you just give us an idea of what the price will be? On steel, tomorrow, we'll have the Steel Summit in Berlin. What are your expectations? We'll begin with the Steel Summit. Mr. Mettler, 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. That is why we welcome this discussion. Of course, you need to protect yourself from unfair competition. That doesn't mean you shouldn't do everything you can in order to stay competitive. I think we need to continue to work on that. The industry as such, it applies to us also. We need to have, 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. Then the prices for a Neue Klasse in China. It's a very attractive product offering or will be, but we haven't actually fixed the prices yet. Of course, it will be quite competitive.
Thank you. It's time to the last request for the floor. Last question comes from Christoph Meyer, DPA. 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 I compare that to 2022, it looks much worse. If I compare to the time before that, it's actually looking quite normal. 2022, 2023, 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.
Mr. M eyer, 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. In the last two or three years, you've never heard us speak out the word crisis. Business results, they are as they are. I mean, we work for them hard every year. In 2022, 2023, there were always special effects. In 2022, we had a special effect of $7 billion. That was when the 75% majority in BBA. We had a special effect. So that's perhaps can't be compared. In 2023, there was the semiconductor situation, which reminds me of an experience. 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, 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. Globally, it's even associated with growth. We would not want to speak of a crisis in a situation today.
Thank you, Mr. Meyer. Thank you for the last question. I think that kind of rounds off our telephone conference today pretty well. Thank you, colleagues, for your questions. All the best to you. I'm sure we'll see each other soon. Servus and goodbye.