BMW has cut its 2026 business outlook after noting that the slowdown in China is accelerating faster than expected, while the conflict in the Middle East is adding pressure by affecting consumer sentiment and driving up energy costs.
BMW has lowered its 2026 profit forecast by 1% to 3%.
This move highlights the significant dependence of the European automotive industry on external factors. Regional automakers are already under pressure from increasingly fierce competition from Asian rivals and weakening domestic demand.
BMW has stated that its core automotive business's operating profit margin for 2026 is now projected to be only 1% to 3%, a sharp decrease from the previously forecast 4-6%.
BMW has stated that its core automotive operating profit margin for 2026 is now projected to be only 1% to 3%, a sharp decrease from the previously forecast 4-6%. The company has also adjusted its sales expectations, shifting from a stable delivery forecast to a slight decline for next year.
The group's pre-tax profit is expected to decline significantly. According to BMW's definition, a significant decline is equivalent to more than 15%, whereas previously the company had only forecast a moderate decline. Following the revised outlook, BMW shares listed on the Frankfurt stock exchange fell 6.6%.
The company also shifted its forecast for vehicle deliveries from stable to slightly declining for the coming year. BMW will also adjust its "existing structures and processes to reflect the significant deterioration in market conditions."
BMW Group CEO Milan Nedeljković said the company would "significantly strengthen and accelerate" cost-cutting measures to respond to the new situation. BMW will also adjust its "existing structures and processes to suit the severe deterioration of market conditions."
The German automaker did not disclose details of these measures, but said the plan would lead to an unusually negative cost in the second half of 2026.
How does BMW operate in these markets?
China remains the most important market for German automakers. Not only BMW, but brands like Volkswagen, Porsche, and Mercedes-Benz are all feeling the impact of fierce price competition in this market, which some industry leaders describe as a battle of "natural selection."
Not just BMW, but brands like Volkswagen, Porsche, and Mercedes-Benz are all being affected by the fierce price competition in China, which some industry leaders describe as a battle of "natural selection."
BMW acknowledges it "cannot operate in isolation" from the developments in China, and argues that growth in the US and Europe is not enough to offset the weakness in the world's largest automotive market.
In addition to the China factor, BMW also stated that the impact from the conflict in the Middle East has been more severe than initially anticipated. The company attributed the increase in energy prices and the decline in global consumer sentiment due to "instability" to the added pressure on its business operations.
The company stated that rising energy prices and declining global consumer sentiment due to "instability" in the Middle Eastern market have added further pressure to its business operations.
BMW's downward revision of its forecast once again reflects the challenges European automakers are facing as the global automotive industry enters a phase of intense competition, high costs, and volatile demand.