BMW has lowered its profit forecast for the second time in five months due to problems in China

German automaker BMW has lowered its profit forecast for its automotive business for 2026—for the second time in the past five months. The automaker’s performance is being hurt by falling demand in China and the expansion of its restructuring program.

The BMW Group has lowered its forecast for the automotive segment’s earnings before interest and taxes (EBIT) margin to a range of -0.5% to 0.5%. The company had previously forecast a range of 1% to 3%. This is the second downward revision since June, Bloomberg noted.

BMW has also lowered its delivery forecasts: the company now expects a “moderate” decline in sales compared to last year, whereas it had previously anticipated a “slight” decline (the original text uses the terms “moderate” and “slight decrease,” respectively). At the same time, the automaker still expects the automotive segment to generate more than €2.5 billion in free cash flow for the year.

For a long time, the company has relied on China for profits, but BMW is now facing falling demand there due to fierce competition from local brands such as BYD, particularly in the electric vehicle market, according to Bloomberg. The country’s ongoing real estate crisis is also weighing on demand, the agency added.

In the third quarter, BMW deliveries in this region fell by 25% compared with the same period in 2025. At the same time, deliveries to North and South America rose, and the U.S. virtually eclipsed China as BMW’s largest single market, Bloomberg noted.

BMW is trying to cut costs, reshuffle its leadership, and more actively implement artificial intelligence both at its factories and at its headquarters in Munich, Bloomberg added. CEO Milan Nedelkovic, who took the helm in May, is pushing for the elimination of about 8,000 jobs worldwide—roughly 5% of the workforce. At the same time, the automaker is accelerating the launch of next-generation vehicles and plans to phase out outdated models ahead of schedule: according to the company, this will boost profitability in the coming years.

In mid-June, BMW sharply revised downward its financial guidance for 2026, citing a downturn in the Chinese market and rising costs due to the situation in the Middle East. At that time, the forecast for the automotive business’s margin was lowered from 4–6% to 1–3%.

The news caused BMW’s stock to plummet 8% to a more than five-year low and also dragged down the share prices of Volkswagen, Mercedes-Benz, and Stellantis. Bernstein analyst Stephen Wrightman noted that the negative trends in the Chinese market have accelerated more sharply than expected, and that sales growth in Europe and the U.S. is insufficient to offset the decline in China.

BMW shares are currently trading in Frankfurt at a price 38% lower than at the beginning of 2026. The most common analyst recommendation for BMW shares is “Hold”: the stock has 11 “Hold” ratings, according to FactSet data. Eight other analysts recommend buying the stock (Buy and Overweight), while six recommend selling (Sell and Underweight). The average price target of €67.24 implies a 16% increase from current levels.

This article was AI-translated and verified by a human editor