BMW has lowered its profit expectations for 2026, warning of a substantial decline in earnings as weaker demand in China and ongoing tensions in the Middle East continue to affect the automotive market, according to EuroNews.
The revised outlook triggered a sharp market reaction, with BMW shares falling more than 7% in European trading following the announcement.
Profit Forecast Revised Downward
The German carmaker, which owns the BMW, MINI, Rolls-Royce and BMW Motorrad brands, said deteriorating market conditions and restructuring costs are expected to weigh heavily on financial performance this year.
According to EuroNews, BMW now expects vehicle deliveries to decline slightly compared with 2025, reversing its previous forecast that sales would remain broadly stable.
The company also revised its profitability targets downward. BMW now forecasts an automotive EBIT margin of 1% to 3%, compared with its previous guidance of 4% to 6%. Its projected return on capital employed (ROCE) was also reduced to 1% to 5%, from an earlier estimate of 6% to 10%.
As a result, pre-tax profit is expected to fall significantly from the €10.2 billion reported last year.
China Remains a Major Challenge
BMW said competition in China has intensified as consumer demand weakens further in the world’s largest automotive market.
The company also highlighted the impact of the Middle East conflict, which has contributed to higher energy prices and weaker consumer confidence globally.
While sales have improved in Europe and the United States, BMW stated that these gains have not been sufficient to offset the slowdown in China.
Russ Mould, Investment Director at AJ Bell, told EuroNews that geopolitical uncertainty and higher energy costs are reducing consumers’ willingness to make large purchases, including new vehicles.
Cost-Cutting Measures to Accelerate
BMW announced plans to intensify efficiency programmes and implement additional structural measures to reduce costs. The company warned that these initiatives will have a one-off negative impact on earnings during the second half of 2026.
Milan Nedeljković said the company must adapt quickly to the changing market environment, emphasizing the need for greater speed and efficiency across operations.
Despite the weaker outlook, BMW maintained its forecast for automotive free cash flow above €2.5 billion and confirmed that its dividend policy and ongoing share buyback programme remain unchanged.
The company is scheduled to publish its half-year financial results on 30 July 2026.
Photo: bimmerlife.com
