Key facts
- BMW AG has lowered its 2026 profit outlook, citing weakening demand in China and the impact of the Middle East crisis.
- The company now forecasts an automotive EBIT margin of 1%-3%, down from a previous guidance of 4%-6%.
- BMW expects a significant decrease in pre-tax profit, over 15%, a reversal from earlier expectations of a moderate decline.
- Shares of BMW fell more than 7% in European trading following the profit warning.
- BMW plans to intensify cost-cutting efforts, with a one-off negative impact on earnings expected in the second half of 2026.
German automaker BMW AG has issued a profit warning, forecasting a significant decline in pre-tax profit for 2026 due to weakening demand in China and the impact of the Middle East crisis. The company now expects its automotive EBIT margin to be between 1% and 3%, a sharp reduction from its previous guidance of 4% to 6%.
BMW cited worsening market conditions and increased competition in China, alongside the greater-than-expected impact of the Iran war on energy costs and consumer sentiment. While sales in Europe and the US have improved, they have not offset the slowdown in China. The company now anticipates a slight decline in vehicle deliveries compared to the previous year, rather than remaining stable.
In response to the challenging market, BMW plans to intensify and accelerate its cost-cutting measures through structural and efficiency initiatives. These efforts are expected to result in a one-off negative impact on earnings in the second half of 2026. The announcement sent BMW shares down more than 7% in European trading, reaching their lowest level since November 2020.
Analysts suggest that the warning reflects broader pressures facing European carmakers and may necessitate a strategic rethink, potentially including capacity cuts. BMW confirmed that its automotive free cash flow is still expected to exceed €2.5 billion, and its dividend payout ratio and share buyback program remain unchanged.