Ladies and gentlemen, welcome back to our quarterly earnings call. Oliver Zipse and Walter Mertl are also back in the room with me. The line will be open shortly for your questions. The operator will first give you some technical instructions.
Ladies and gentlemen, we will now begin our Q&A session. If you have a question, we ask that you please use the raise hand function at the bottom of your Zoom screen, or if you have dialed in, please press star nine to enter the queue. Once your name has been announced, you can ask your question. If you want to withdraw your question, please lower your hand using the raise hand function in the Zoom app, or via telephone, press star nine. Thank you, and please stay tuned for our first question. Our first question is from José Asumendi from JP Morgan. Please unmute your line and ask your question.
Thank you, Max. Good morning, Oliver and Walter. I wanted to ask just a few questions, please, and mainly revolve around China. Obviously, too early to give 2026 guidance, but I was wondering, with the upcoming product launches that you have, and particularly in Neue Klasse, do you think you can stabilize the business model and deliveries in China sequentially, or even deliver higher sales growth in 2026 versus 2025? Second, can you give us an update, please, where you stand on dealer restructuring in China? How far in the process are you in terms of reducing the number of dealerships and consolidating the dealer network? Thank you very much.
Thank you, José. We start about China with Oliver and then Walter. Oliver.
Good morning, José. This is Oliver speaking. Regarding China, I think what we see in China is a continued intense competition. That has been influencing our sales volume also in 2025. Now, I think since September, we're kind of stabilizing on the current volume. It's about 50,000 units per month that is stabilizing. Also, prices are stabilizing. We see continued intense competition, of course, there. I think Walter will talk in a minute about the dealer restructuring. Overall, I think the Neue Klasse will stabilize the business there. It will not come to the market early in the year. It will be rather at the end of the year. We will see next year about the volume of 2025. Looking at the product portfolio we have there from.
Mini over all segments of BMW and then Rolls-Royce, I think that will give us some form of resilience. Of course, the Neue Klasse, we will have a car there which is adapted to Chinese needs. It's a longer version. There's a lot of Chinese for China content in there. I think we're ready to give good responses to a continued dynamic market. We will not see rapid growth in China next year, no, not in 2026. In 2027, we will have to see there. What is important is that we are entering into targeted collaboration with Chinese partners. I mentioned a couple of them. It's Alibaba. It's DeepSeek integration. It's Huawei. It's Tencent. It's Momenta. What we see there is that you will see specifically on the digital side, a lot more cooperation with our Chinese partners in China.
Thank you.
Thank you, Oliver and Walter.
Hello, José.
Yeah.
As we mentioned, we stabilize on roughly 50,000 units a month in China. The dealer restructuring network is part of it because we have to stabilize that one first. We are well on track. We are more than halfway through. We will finish this restructuring by mid next year. With every dealer restructured, we come in a more stable phase on the dealer profitability side, which is supporting and straightaway our sales performance in the market. We have even established new locations with the dealers. We closed some of those. We switched some from sales and service to service only in order to maintain even our service setup and footprint. I think we are doing everything in order to stabilize China. Like Oliver mentioned, we would not expect growth next year. The rest is coming then with the Neue Klasse from 2027 onwards.
We shall see that one about the market dynamics.
Thank you very much José , for your question. Next question, please.
Thank you. Our next question is from Patrick Hummel from UBS. Please unmute your line and ask your question.
Yeah. Hi, everybody. I hope you can hear me. It's Patrick from UBS.
Perfect. Hello, Patrick.
Thank you. A couple of questions. First of all, Oliver, I think you ended up with your prepared remarks saying you're looking into the future with optimism. I'd like to pick up on that in terms of what that means for next year. We currently have a run rate in the auto margin in the second half of, let's say, around 5%, I guess Q4, maybe even a little bit below. If we think qualitatively about the key puts and takes going into next year, I appreciate today's not guidance day, but can you just elaborate a little bit. Where that optimism comes from and whether that's also optimism as far as an EBIT margin expansion year over year is concerned? Because I think we do have some headwinds year over year. Obviously, China had weakened during this year. We have some further tariffs headwinds, I would assume.
We have some FX headwinds. Just to better understand where that optimism comes from, thank you. The second question is a more capital allocation related one. Your free cash flow guide for the year is now more than EUR 2.5 billion because of that almost EUR 1 billion of delayed refund of the overpaid tariff. I'm just wondering how that affects your thinking about future share buyback activity. Are you just going to smoothen and sort of allocate the EUR 1 billion that's missing this year to this year so that you can still continue your share buyback with a billion plus next year? How do you think about that timing difference we have because of the overpaid tariff this year in the context of share buyback in the future? Thank you.
Good. Yes, we understand. Thank you, Patrick. We start with Oliver.
Patrick, good morning. I would like to start philosophically a little bit. Karl Popper once said, "Optimism is an entrepreneurial duty." Just imagine you are not optimistic about the future of your company. What would that mean? I leave the answer of that question to you. For BMW now, that optimism is not naive optimism. It is the result of a year-long strategy process which gives us a lot of resilience. First of all, there is, of course, the Neue Klasse where we have all technology clusters on benchmark level. The investment for that is mainly already behind us. That is what we have already done. Now we talk about the rollout of many new cars based on these technology clusters. If we would not be optimistic after these high investments, which are already behind us, we would have done something completely wrong.
Of course, on the cost side, we are continuously improving. We are below the 2024 levels already now substantially. We take advantage of application of AI in all processes, becoming more efficient at the same time, having efficiency as a core element of our entrepreneurial duty on top of technological competence. That gives us all optimism. Don't forget, let's look at 2025. Europe was growing by more than 8%, the United States by more than 9%, the rest of the world by more than 10%. If you only look at crises or more difficult markets like China or supply chain issues, this is not the whole story. The whole story is we have a global footprint. We have a technology-neutral approach. We have a premium multi-brand strategy across all relevant customer segments.
We play the global market, which is growing, by the way, also all forecasts for the next five years. You can read whatever source you want. There is a growing worldwide market on individual mobility. That is where we think we are resilient for the future. That gives us, of course, also some realistic optimism into the future.
Yeah, Patrick, I can understand your arguments. Of course, China's second half year was different than in the first half year, but we are still running and doing efficiencies against it. There will be a first half year impact and straightaway, of course, I can understand this one. The same is with FX. It's also the impact in the second half year. Translation is different in the second half year than in the first half year. You know that all across the companies. On the other side, tariff will be different as well in the first half year compared with the first half year of last year. Efficiencies, we just elaborated today that we also did a good work on that on all cost categories, having positive impacts between 2025 and 2024. So year to date, I even mentioned today.
Around EUR 2 billion cost efficiencies across all cost elements, not just some fixed costs, but across everything: material costs, logistic costs, fixed costs in any kind. These ones are also running positively on the other side. With respect to your free cash flow, of course, I can understand the discussions and your points with respect to CapEx and depreciation. This will be, of course, directionally positive. As we just stated, our CapEx is there. Depreciation will grow next year with the start of the production of our Neue Klasse. Of course, depreciation is kicking in. On the other side, do not forget the efficiencies. That will be also done, of course, positively for the free cash flow. Not to forget, you mentioned refund of tariffs next year. This is a time gap between EBIT and cash.
Of course, there is sometimes an effect positively, as you just have provisions for, but at one stage, as we see on the warranty side on us, there is a cash out. In principle, that is okay. On the other side, with regards to capital allocation, of course, we cannot mention anything with respect to the capital allocation at this stage. We will provide you, of course, with the annual conference and update. More importantly, I think we stress that we have a strong balance sheet. This gives us the ability to honor our capital allocation commitments in this dynamic year 2025. I think we underpinned that we said for this year 2025, free cash flow automobile is not a cap, but we took this cap away.
We stressed in the ad hoc as well as in the speech today that we still stick to the 30%-40% dividend rule we have. Even though we are not having a policy, we stick to our own rules. Thank you, Patrick.
Thank you, Patrick. Next question, please.
Thank you. Our next question is from Tim Rokossa from Deutsche Bank. If you could unmute your line and ask your question, please.
Yeah, thank you very much. Hey, Max, Oliver, and Walter. I'd like to follow up very quickly to that, Walter. If I take the $2.7 billion or so starting point this year, you have the U.S. tariff repayments. You have less IBS cash out. You have CapEx down. We are in the vicinity of something like $4 billion-$5 billion for next year, just knowing the building blocks that we know today. Maybe there's something you want to say on that. To my two questions, please. On China, I think what was most surprising with the latest profit warnings is actually how profitable you are still in China. So much about that validated optimism, Oliver. I fully agree with that. You have to be optimistic on that market. Some would say that your assumption about a flat 2026 market is now, again, too optimistic.
How can you give us some reassurance that we do not stand here and post the summer break 2026 and have the same revelation that we had over the last two years, i.e., you were still being too optimistic, assuming a flat market when in reality it was probably trending down? Is there anything you changed with respect to your quarterly assessments, monthly assessments, anything else, adjusting capacity, and so on and so forth? Thirdly, probably to you, Oliver, as well, or maybe Walter. We all talk about the German OEMs all the time. Every newspaper seems to sell better, saying BMW has a problem, Mercedes has a problem, VW is terrible, and so on and so forth. When in reality, you guys have very globally diversified business models. You make money from all sorts of things.
The real issue is on the supplier side in Europe and Germany, arguably. That also means more support from you guys for these suppliers. Is that something that we should preemptively put in our models every year now? Is there something that you see, Oliver, in your discussions with politicians? Is it actually understood how urgent the situation there is, or is this just being totally ignored and everyone just focuses on the OEMs? Thank you.
Thank you very much, Tim, for your question. I think we start with the first and the second one with Walter, and then about the German OEMs, the answer will come from Oliver. Walter, please.
Hello, Tim. Yeah, I can see all the points which I tried to elaborate with Patrick's answers on the free cash flow statement. Yep. Of course, I can't give you any numbers. That is not the time to do so. The topics, of course, I think I elaborated already answering Patrick's question. With respect to China and profitability thing and optimism, we do our homework. We differentiate our tasks and measures on the production side, but also on the sell side. I think we stressed it already today. We mentioned on the production side that we are utilizing our capacity flexibly in all aspects. I can just underpin that the cost hit trick is a totally different one in China than outside China. I mentioned that also permanent.
On the sales side, we are just in the middle of the consolidation, the restructuring, and resizing these things. As I mentioned, we closed some locations. We opened even new locations. We downgraded some fully fledged dealerships to service only in order to cover the customer support fields. We are doing all that stuff. We are more than halfway through already now. We will finish it by mid-year 2026. With every dealership set up freshly and restructured, we will contribute to the profitability of the dealers and hence also to make it more attractive to sell fantastic BMW Group cars. In that respect, I think we are still on a good track. You do know that we have been performing well in the first half year.
At the capital market day, we had the discussion about BUBS, which impact is it all about with this commission statement changed? We shall see that even we have to consider some subsidies which are differently now since October than in previous quarters coming from provinces and cities. That will also come into effect one way or the other. We are observing the whole market and we cope with the dynamics with all instruments we have. I think that should underpin our optimism. Thank you.
Thank you, Walter. Oliver.
Tim, I think. The industry. I do not like, as you know, the word crises, but we are on the crossroads of something. The crossroads means that the rules for competitiveness for OEMs as for suppliers alike are very similar. First rule is you have to have a global approach. To be able to profit from technological advance, from global supply chains, and also from global markets. I am adamant that this is one of the secrets of the future of suppliers and OEMs. The second is that you have to have some form of technology-neutral capability. That means you have to be able to manage complexity, to stay efficient despite the complexities, efficient in all your processes. That means you have to be very close to your markets, which are super diverse. There is no one-size-fits-all in market demand.
Technology-neutral means you have to embrace complexity and at the same time stay efficient. The third one is, and that is very much linked to the global approach, you have to be on the verge of technological and innovation development. A lot of technology, they are not born inside Germany or inside Europe. They are born in a global context. Look at batteries. Look at AI applications. Look at digital capabilities like assistant or autonomous driving. If you do not have a global approach to have connectivity into these technologies, you might run into competitive problems. To see that and discover that, resilience means that you have to stay globally connected despite the fact that you might have disruptions in your global supply chain. You have to read it correctly.
If you think you become resilient to cut your global supply chains, I think you're on the wrong path.
Thank you very much, Tim. Now we come to the next question. Yes.
Thank you. Our next question is for Stephen Reitman from Bernstein. If you'd like to unmute your line and ask your question, please.
Yes. Good morning. My question is also about China. You've mentioned that obviously the cost base you have in China is very, very different from what you have in Europe, and I guess even in your German plants and even in Hungary, I guess. What I was thinking, what that means implications for pricing in China of your new products. We've seen your German neighbor, Mercedes-Benz, price their CLA based on their new electric platform at a very aggressive level, CNY 259,000, so very much like to like with the Tesla Model 3 long range. Obviously, it's not a vehicle that directly correlates to the iX3 or the i3, but maybe it's a signal that it's a realization that one has to price at these kind of levels, which are quite different from where we've seen historically the German autos price their cars.
Do you have any kind of observations on that without necessarily revealing what your pricing strategy in absolute detail is going to be? Thank you.
Thank you very much, Stephen. Walter.
Hello, Stephen. We always have to differentiate the price and the volume, not just per se, but also which price we are talking about. We have MSRPs and we have transaction prices of the market. The transaction prices are usually with the dealers because they are independent. We have our net sales revenue, ultimately how we are selling our cars and products to the dealers. With respect to the transaction price deterioration since 2023, especially since 2024 Q2, we have given here and there more support to them in order to adjust the profitability. That is crystal clear. The whole transaction prices collapsed, in fact, in 2024 for the whole industry, everyone across all segments, whether we have high pay or low pay cars. Still, the dominant growth in the market comes from cars up to CNY 150,000. That is the dominant growth year- on- year.
Now, with respect to our competitors' pricing, of course, we are having a look on which transaction price levels our cars are priced transactional price-wise currently. We have our understanding how we utilize this one for us, how we set our MSRP or recommended price. You can see that also if you compare the predecessor of the current X3 in China and the successor, the current X3. You see transaction prices slightly elevated, but not much. I think based on that one, we consider all the dynamics, even our competitors trying to utilize whatever best we learn from all of that. We set the prices properly and parallel, of course, with respect to our profitability. We are working very hard on all the cost levers with respect to material costs, but also with respect to production costs.
Do not forget, we fully consolidate our joint venture, BBA, while other competitors do not have these fully consolidated effects like we do. We have a different revenue base. We have different costs in our balance sheet and P&L. We cannot compare straight away the P&L effects between us consolidating fully our joint venture partner in China and others, just having them like they have shares in other companies and getting that as a financial result. That is, of course, also to be considered. Thank you, Stephen.
Thank you, Stephen. Next question, please.
Thank you. Our next question is from Philippe Houchois from Jefferies . Please unmute your line and ask your question, please.
Yes, good morning. Thank you very much. I've got two questions, if possible. I'll take your point, Oliver, about optimism and looking into 2026. I look at all the changes we've seen on tariffs, and more recently, we've had no new proclamation from Trump on the 3.75. We're going to get tariffs from the U.S. into the EU to zero. The CO2 pullback in the U.S. is a mixed opportunity for you, I assume. I'm just wondering, is there a reason why, if we look at Western world, U.S., Europe, if there should be any incremental negative in 2026 versus 2025. Or if those changes kind of balance out into a more optimistic outlook? My second question, then I'll be a pessimist. It seems like the 10th of December is when we're going to hear from the EU about adapting their strategy.
I look at this industry, and everybody has a different view, a different agenda on CO2, on local content, et cetera. Rather than a unified approach, that might give the industry a bit more weight in discussing with Brussels. I am just wondering, do you think that on the 10th, we get a changed auto policy and then everyone will have to adapt, or there will be a little bit of everything for everyone? Do we have a piecemeal approach? You will be happy. Or do we have a view that will favor you or the French or the Germans, the usual divide in the industry? Thank you very much.
Thank you very much, Philip. Oliver.
Philip, good morning. Thank you for your question. On the tariff side, I would like to underline what we have said before. If you have a global business model that is kind of a natural hedge you have, take the example of BMW. Just for the sake of the argument, just assume that we're importing and exporting into the United States and into Europe about the same amount of cars. From Germany into the United States and from Spartanburg into Europe. Just for the sake of the argument, if that would be. That is about the case, it is the equal value of cars. Then, of course, before, we paid the sum of 12.5%, 10% into Europe and 2.5% into the United States. Now, after the conclusion of the deal with the United States, we are 15%. It is an increase of 12.5%- 15%.
This does not destroy any business model. This effect that it almost does not change, despite the fact that locally we have different taxes, means that a global business model kind of protects you against these changes. That is even more true when both markets grow. As I said before, Europe grows by more than 8% in the first nine months, and the United States grew by more than 9% in the first nine months. It is kind of even a stabilizing element. I think what is even more important is that a global business model and international cooperation is at the core of everything industry must do. They must do everything to get also political support for global trade and to tell what the guiding principles of this trade is. We have to reduce trade barriers instead of increasing them.
If you look, for example, at what we see in the semiconductor industry, at the core of it is not an industrial problem. It is the inability to talk to each other on an eye-high level. That is why we said we have to reduce trade barriers, not increase them. I come to your second question. What we really fight for is a new regime in the CO2 regime for 2030 and 2035, away from tailpipe only, all the way to life cycle assessment, that we take all CO2 effects we see in our industry into account. We are confident that we also achieve currently the 2025. I can also tell you 2026 and 2027 will not be different, that we will achieve our targets, despite the fact that they are more strict now in 2025. I think technological neutrality is very crucial.
I think a piecemeal approach is exactly the wrong way. As long as you stay tailpipe only, it doesn't help you if you allow some e-fuels in it and also allow plug-in hybrids. That is not enough. That is not enough to give an industrial valid proposal for CO2 reduction, which keeps the industry in its size, which doesn't shrink markets. I think it's very important. All we achieve so far gives us credibility in our position. We think we have to get away from tailpipe-only measurements. This is the most important request we have from policymakers. Thank you.
Thank you very much, Philip. Now we know Oliver is responsible for optimism. Thank you. Next question, please.
Thank you. Our next question is from Horst Schneider from Bank of America. Please unmute your line and ask your question.
Yes, thank you. I hope you can hear me. On this optimism, I just remember at one of the BMW meetings, I think it was 10 years ago, there was a joke made: what does a German do who sees light at the end of the tunnel? He extends the tunnel. That is not my question. I think you have got clearly a different stance, Oliver. My questions are more related to Europe, a region where you perform strong, which is a good reason for you at the moment. Maybe you can talk a little bit about the order trends and price trends that you are seeing. The background of my question is that we see at the moment that one of your peers is running this significant model launch offensive and, of course, tries to take market share.
That's also what the company targets suggest of this peer. I want to know if there's any impact that you see in the market from that, which could hurt you. The second question also related to that is you said that the iX3 got off to a very good start in terms of orders. Do you see some cannibalization that people switch, let's say, from the iX1 to the iX3? In general, do you see that competitors also react to your very competitive pricing that you have set, the pricing that you can afford because of the Neue Klasse concept? Do you feel also in that context that maybe in 2026, there's very strong competition in the European EV market just because every peer tries to sell the model at the same time? Thank you.
Thank you very much, Horst. Oliver.
Horst, it's not new. In the last 10 years that there's competition and everyone tries to fetch market share from the other competitor. This is, I mean, this is the essence of this industry for many, many, many years. As I said, in Europe, we grow in Europe together with BMW and Mini faster than the market. We are one of the peers who are taking market share. By the way, I don't have any problem. If the iX3 cannibalizes the iX1, it's okay. It's completely okay. I mean, it's a more expensive product, and if that's happening, it's fine. The iX1 is currently completely sold out. It's produced in our Regensburg plant. The Regensburg plant operates absolutely on its limits on a six-day week, three shifts per day. It's completely sold out. I wouldn't have any problem with that kind of cannibalization.
When a higher value product cannibalizes the lower value product, that's okay with me. There is a very strong competition in the EU market, EV market. We know exactly the point where we stay in the market and when we leave the competition. We know exactly the point where we do that. You can adjust your prices, but you must know in what kind of business model you're working on. If you look at our results, especially on the group side, I think we do that in that competitive market quite well. At the end of the day, we still have a very, very solid business model. I think with our full lineup of combustion engines, plug-in hybrids, BEVs, and diesels, we are perfectly set up for the European market also for 2026.
That means that you expect an increase of sales, especially on EVs, clearly in 2026, also in Europe. You made the statement on China, but for Europe, clearly you should aim for an increase and higher than the market growth, right?
You hear me silent because we are not at the time of the year to make any prognosis.
Yeah, that's fair.
I remain optimistic. Yes. Yes. Yes. Overall, yes. I do remain optimistic.
Okay. Thank you. And best of luck, of course. Thank you.
Optimism is the word of the day. Yes. Thank you very much, Horst. Now, next question, please.
Thank you. Our next question is Anthony Dick from ODDO BHF If you'd like to unmute your line by pressing star six to ask your question, please.
Yes. Hello. Thanks for taking the question. My question was around the costs. Firstly, regarding the comment you made about costs being lower in Q4, I was just wondering if that should affect the usual seasonality we usually see with Q4 being a weaker quarter from a margin perspective. We have seen some important labor force reduction programs at your peers, especially in Germany. I know this is not really usually the BMW way, but I was just wondering if you were also considering such measures in light of the circumstances. More generally, could you elaborate a little bit in terms of what you are doing on the cost side of things and how that will carry through 2026? Thank you.
Good. Thank you very much, Anthony. We start with Walter about the costs in Q4.
Hello, Anthony. It's about the costs. I didn't mention anything about Q4. Of course not. I elaborated on in the quarter and year-to-date. Optimistically, as this is the time for. We cut our costs in the quarter year- on-y ear by more or less EUR 1 billion. Year-to-date, I mentioned more or less EUR 2 billion. Year- on- year, Q4 will be also lower. That is the lower aspect year on year. In the quarter four, there is the usual seasonality that the highest fixed costs we have in the quarter four, but not year on year. That is still the lower aspect. I hope that makes it more clear. Seasonality is still there. The labor force reduction, I thought we explicitly mentioned that. We have this impact. That we reduce it.
In total, but I have to stress again, we utilize the flexibility also in China, where we have fixed-term contracts in our joint venture. Once they expired, they have not been renewed. That brought it down to slightly below previous year. If we have a look outside China, we would still guide this previous year's level. We are just utilizing the flexibility all over the place, as we had to adjust with our prediction. The Chinese numbers, that is automatically the consequence. With respect to costs, I am happy to repeat myself a thousand times. We just utilize our costs and organize that they are coming down, whether we speak about material costs, CapEx, or any of these fixed costs, but we have no program. We have no cost program, like other ones mentioning.
At one stage, I mentioned even, should you need a program, eventually you need external help. We are not utilizing external help because we just do our homeworks on all cost elements. Thank you.
Thank you very much, Anthony. Next question, please.
Thank you. Our next question is from Stuart Pearson, Oxcap Analytics.
Yeah, good morning. Thank you for taking my question. Just a couple left. I've been just noticing your, I guess, silence or reluctance to answer Horst on the XEV mix in Europe next year. I just wonder, given your, I mean, you're not just on track to meet your CO2 targets this year. You actually might beat them a little bit. So you don't really need to increase XEV mix in the next couple of years. You're already around 40% year-to-date in Europe, markets around 30%. I wonder, is that really a goal to keep pushing that mix higher, or could we see you rather take the benefit of fresh EV product via pricing and margin?
Conversely, if you were to increase your XEV mix and hence improve your CO2 significantly in the next couple of years, could we even see you think about selling your services in a pool to another car maker and monetizing it that way? Just a question on XEV in Europe. The second one's also XEV, but over in the U.S., where XEVs were around 25% of your Q3 sales. I wonder if you can share what proportion of those were benefiting from the subsidy via the leasing loophole that's now being removed and how you see the U.S. market post that. Mercedes was talking about you as still being a growth market. Obviously, it was tough in October on the overhang but still a hangover, but I just wonder how you expect to see that in the coming months and into next year. Thank you.
Okay. Thank you very much, Stuart. We start about the xEV in Europe with Oliver and then the U.S. with Walter. Oliver.
Stuuart, we have this very strange regulation in Europe that you only have a stepping function every five years. Between 2025 and 2029, the targets remain the same. Our mix in 2025, where we increased the BEV sales by more than 10%, almost automatically gives us the leeway to reach the CO2 targets. Now with the new product lineup, also the Neue Klasse, the ramp-up of Mini, and so on, we will almost automatically reach our targets in 2026 because the target stays the same as in 2025. By the way, that's also part of our proposal to the European Union to do a continuous improvement approach that the CO2 targets are adapted every year and not only every five years. We are kind of quite relaxed about the 2026 targets on the BEV side. Will it increase? The market will show, Stuart.
I don't make any prognosis on the BEV market 2026. We follow the markets. We look for market share. If that is with EVs, we follow it. It's very simple.
Thank you, Oliver. Walter.
Stuart, with respect to the ES, we have a lower EV share than we utilize in Europe, and we all understand why. We are still running on roughly 14%, 1.4%. The other way around than Europe, XEV. With respect to the benefit of the support, up to end of September, we utilized the ARA aspect in all relevant numbers. With this respect, we see also, if you have a look for auto data, for example, that even incentives came down. Do not forget, auto data includes the ARA impact, like a tactical support despite the fact the government paid for in the past up to end of September. Our share was always higher than traditional competitors of us. It automatically, you see incentives are coming down, even months and months or quarter on quarter. You can see that in auto data.
With respect to the coming months, we saw that in the month of October, the whole BEV market was a bit lower than previous months, especially September, where the run-off was more or less coming in. I guess it's too early to speak about trends or whatever that will be seen in November and December, but we are still selling good EVs in the U.S. Thank you.
Thank you very much. So we come to our last question.
Thank you. Our last question is from Mike Tyndall from HSBC. If you'd like to unmute your line and ask your question, please.
Morning, gentlemen. Mike from HSBC. Just a couple, if I can. Walter, can you help me with a little bit of maths here? If I look at your EBIT walk, the other bucket was EUR 1.2 billion. I think you said the tariff was in there, so that's roughly EUR 500 million. We have other at EUR 1.7 billion. Now, if I'm not wrong, IBS cost about EUR 800 million last year. We have the reversal of that. There were some other issues in 2023. Again, if I'm not wrong, on airbags and such. How much was warranty of that EUR 1.7 billion? I'm trying to understand when I think about Q4, how much of that continues on into Q4. The second question for Oliver. You've very kindly done a lot of work explaining Neue Klasse to all of us.
I just wonder, how does that translate to consumer awareness? Very strong orders for the iX3. Are customers aware of what a big change this is, or are they buying it because they like the way it looks, the way it drives? I guess the answer is all of those things. I'm curious to know how you can actually raise consumer awareness about this big change that you're making. Thanks.
Good. Thank you very much, Walter.
Hello, Michael. I hoped that my speech was quite clear, but again, happy to speak about it. It was not about 2023; it was about 2024, first of all. In 2024, in quarter three, we had a high three-digit million provision for the warranty cases, a high three-digit million. With respect to this one and three-quarter EBIT hit year on year based on additional tariffs, that is a mid-digit level. Altogether, that is when I mentioned on the one hand and on the other side, that is still positive. The majority of our improvements were then running on material costs and manufacturing costs and direct costs like logistics, for example. Altogether in the quarter that all came in, that was this EUR 1.2 billion bucket. Thank you.
Michael, concerning the Neue Klasse, I think during the IAA here in Munich, we created a huge media awareness of the car, what it is, how it looks, how it's used, what the innovative features are in it. On top of that, in the coming days, journalists and other key opinion leaders will experience and test the series vehicle. I think the core of the car is how it drives. Whoever drove the car said, "I've never experienced anything like how it drives, how synergetic the assistant functions of the car interact with the driver and the physical properties of the car." I think that is new. Of course, we're going to pinpoint it. At the end of the day, people buy on design.
We think with the new design language we created for BMW, we hit it right on spot that people love what they see. It's a new, sleek, very modern language we have here, and that will attract more customers.
Thank you, Oliver. Ladies and gentlemen, now we have reached the end of the telephone conference. Thank you for your optimism to us and for your questions. All the best to you. Bye-bye and servus from Munich.