BMW shares plunged over 8% on Wednesday after the German premium carmaker issued a profit warning, citing an accelerated downturn in China and the widening economic fallout from the Iran war.
Frankfurt-listed ordinary shares opened at €61.12 and touched an intraday low of €60.08 — the lowest level since November 2020.
German automakers Volkswagen and Mercedes-Benz also fell on the session, weighing on the broader European auto index.
As of press time, BMW‘s stock was trading 8.3% lower — a year to date decline of over 30%.
Outlook Update
BMW slashed its full-year 2026 outlook late on Tuesday, pointing to an accelerated downturn in China’s domestic car market and the wider economic fallout from the Iran war.
The automaker now expects an operating margin in its core automotive segment of 1% to 3%, down from a prior corridor of 4% to 6%.
Group pretax profit is expected to fall “significantly” — defined by BMW as a decline of more than 15% — after previously guiding for a moderate drop.
Core deliveries are also projected to decline slightly, reversing earlier guidance that volumes would hold at 2025 levels of roughly 2.46 million vehicles.
BMW also cut its automotive free cash flow target sharply, expecting the figure to come in above €2.5 billion for the full year.
CEO Milan Nedeljković, who took over from longtime leader Oliver Zipse last month, said BMW would “significantly intensify and accelerate” cost-cutting measures.
The company disclosed that these steps would result in a negative one-off charge in the second half of 2026 — however, BMW did not provide further details on the figures.
Weak Demand in China
China remains BMW‘s single largest market globally. Its sales figures have, however, deteriorated quarter by quarter.
The German automaker delivered 625,527 vehicles in China in 2025, a 12.5% decline year-on-year that pushed volumes back to levels last seen in 2017–2018.
At the time, CEO Oliver Zipse acknowledged that sales in China “did not meet the group’s target” due to intense competition from domestic brands.
The slide deepened in the fourth quarter of 2025, when China deliveries fell 15.9% year-on-year.
BMW‘s first quarter of 2026 brought no relief: China sales dropped 10% to 144,072 units.
While that still outpaced the broader Chinese passenger car market — which contracted 17.5% in the first quarter, according to China’s Passenger Car Association (CPCA) — the trajectory remained firmly negative.
BMW management flagged that the second quarter of 2026 showed a further acceleration in China’s downturn, with the company expecting “significant” year-on-year declines in both profit and free cash flow for the period.
The broader Chinese market has now recorded eight consecutive months of declining domestic car sales through May.
The CPCA has revised its full-year market forecast downward multiple times in recent months, reflecting the depth of the downturn.
German Automakers Struggle
BMW‘s warning reinforced a pattern that has emerged across Germany’s premium carmakers.
Mercedes-Benz reported a 48.8% profit decline for 2025, while Porsche, Audi, and Volkswagen have all reported falling deliveries in China.
According to JPMorgan analysts, Tuesday’s restructuring could result in a 10% to 15% capacity reduction announcement at BMW‘s capital markets day later this year.
A BMW spokesperson confirmed to Reuters that capacity reductions were “being considered,” however noted it was too early to comment on specific future measures.
Volkswagen CEO Oliver Blume has separately warned that Germany’s traditional automotive export model “no longer delivers,” and has undertaken a major restructuring to embed the company more deeply in China.
Jefferies analysts said they expected BMW‘s overhaul to focus on German operations — however, the restructure could also accelerate localization in China and North America to protect margins.
Global Figures
BMW reported first-quarter 2026 pretax earnings of €2.3 billion, down 24.6% year-on-year, on revenue of €31 billion — an 8.1% decline.
The automotive EBIT margin came in at 5.0% for the first quarter, above analyst expectations of 4.7% — but well below the 6.9% recorded a year earlier.
At the time, BMW maintained its full-year guidance, citing product momentum from the Neue Klasse iX3 and strong European order intake.
Six weeks later, the guidance has been scrapped.
According to BMW, momentum in the United States and Europe could not offset China’s decline, and the impact of the Iran war — through elevated energy costs and deteriorating global consumer sentiment — has proved worse than initially expected.
BMW‘s first quarter global deliveries stood at 565,748 vehicles, down 3.5% year-on-year. The main brand sold 496,006 units, a 4.6% decline.
Battery-electric vehicle deliveries fell 20.1% to 87,458 units, driven by weakness in China and the United States.
Despite that, European BEV order intake surged roughly 40% year-on-year on the back of the Neue Klasse iX3 mid-size SUV.
