The car manufacturer BMW is significantly reducing its annual outlook due to the crisis in the Chinese car market and the consequences of the Middle East war.
The DAX group only expects an operating profit margin before interest and taxes of 1 to 3 percent for the automobile division this year, as it surprisingly announced on Tuesday after the stock market closed in Munich. Previously, management had estimated 4 to 6 percent.
The paper has already lost more than a quarter of its value in main trading this year. From a twelve-month perspective, things look less dramatic at minus 8 percent. In the second half of 2025, the share gained significantly. BMW is currently worth almost 42 billion euros on the stock exchange at the most recent closing price.
So far, management under old boss Oliver Zipse was optimistic that it would be able to compensate for much of the current headwind in China and higher tariffs. The new boss Milan Nedeljkovic now had to admit that the situation is even less rosy than already feared.
The new group leader now also estimates the group’s pre-tax profit to be lower: it should fall significantly instead of just moderately compared to the previous year. The Bavarians are also becoming more pessimistic about the inflow of cash in the car business and are now only expecting more than 2.5 billion euros instead of over 4.5 billion euros. Car deliveries are likely to decline slightly in 2026 instead of remaining at the previous year’s level.
The negative development in the Chinese car market accelerated further in the second quarter, the statement said. This leads to tougher competition in China and in countries in the Asia-Pacific region, which BMW cannot escape. The conflict in the Middle East is also a burden. High energy prices increased the company’s costs, and uncertainty also weighed on consumer sentiment. In the second quarter, earnings and cash inflow are likely to decline significantly year-on-year.
BMW now wants to counteract this with further structural and efficiency measures. The savings measures would only become apparent in the following years, but would have a one-off impact on earnings in the second half of 2026, it said. What exactly the savings should look like and where it should start remained unclear at first.
Nedeljkovic emphasized the positive prospects of the new generation of electric cars – this gives momentum: “With the New Class, we are bringing the strongest BMW portfolio in history onto the road in the next two years,” he said. “At the same time, we will adapt our current structures and processes to the drastically worsening market conditions.”
“Our corporate responsibility therefore requires us to significantly intensify and accelerate our ongoing measures,” said the manager. So far, BMW has managed without drastic personnel measures and job cuts, while its competitors in the Volkswagen Group and Mercedes-Benz are losing jobs on a large scale.
BMW disappoints with cut forecast and takes industry with it
After BMW significantly reduced annual targets, the car company’s shares fell to their lowest level in five and a half years on Wednesday. They initially fell by 11.5 percent via XETRA, but were able to contain the loss as trading progressed to ultimately minus 8.34 percent at 62.24 euros. This brings the price decline in the current year to almost a third.
The Munich-based company’s unexpectedly cloudy outlook also weighed on the European auto sector. The shares of Mercedes-Benz posted losses of 4.36 percent at 46.75 euros, Volkswagen fell by 3.48 percent to 86.54 euros, while Stellantis ultimately fell by 3.04 percent to 5.80.
Because of the crisis on the Chinese car market and the consequences of the Middle East war, BMW only expects an operating profit margin of 1 to 3 percent for its car division this year. Previously, management had estimated 4 to 6 percent. The new CEO Milan Nedeljkovic now also estimates the group’s pre-tax profit to be lower: it should fall significantly instead of just moderately compared to the previous year. Car deliveries are likely to decline slightly in 2026 instead of remaining at the previous year’s level.
Analyst Jose Asumendi from JPMorgan spoke of a “wake-up call for the auto industry.” From his point of view, BMW needs to completely rethink its strategy in the compact segment in China. All European premium manufacturers are currently not price-competitive here.
Henning Cosman from Barclays attested to a “big margin warning”. The sheer extent of this speaks against the fact that the lowered business targets are perceived as a major cleaning-up that relieves the burden.
Deutsche Bank analyst Tim Rokossa noted that a reduction in the targets was recently expected after the share price performed below average and the car manufacturer canceled a long-planned analyst meeting with the CEO. However, the extent of the warning was significantly greater than expected – and unfortunately the telephone conference left more questions than it provided answers.
Meanwhile, Christian Frenes from Goldman Sachs distributed a little calming pill. After all, the distribution policy remained unchanged. BMW has the opportunity to increase share buybacks given the weak share price development. In this regard, market expectations may even be too low. Nevertheless, he also expects the market’s profit estimates to fall significantly.
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MUNICH (dpa-AFX)
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