BMW shares collapsed at the fastest pace in almost a year. Why did investors panic?

Quotes of German carmaker BMW on October 8 showed the sharpest drop since November 2024. The selloff began after the premium brand worsened its financial forecast due to weak sales in China and costs associated with U.S. duties.

BMW shares fell more than 9% in Frankfurt trading after the premium car maker said it expects a slight decline in the group's pre-tax profit in 2025 compared to last year. The company had previously expected the figure to remain flat, Bloomberg recalls. BMW also sharply worsened its forecast for free cash flow in the automotive segment - from €5 billion to "more than €2.5 billion."

In the Chinese market, which is a key market for German automakers, BMW has done worse than the company expected, Handelsblatt reports. Sales there fell 11.2 percent in the first nine months of 2025, falling short of forecasts. BMW has now lowered its sales expectations for the last quarter of the year and intends to provide financial support to its dealers in China, the publication noted.

In addition, the automaker now predicts that refunds of hundreds of millions of euros in duties paid by U.S. and German customs authorities will not happen this year, but only next year. The U.S. and EU agreed at the end of the summer to reduce duties on cars retroactively. As Handelsblatt explains, BMW produces X-series SUVs in the U.S. and exports them from there to Europe. In Germany, however, the company assembles the 5-series and 7-series sedans for delivery to the U.S. market.

"While disappointing, the decline in sales volumes in China is understandable given the challenges in the Chinese real estate market," Bloomberg quoted RBC Capital Markets analyst Tom Narayan as saying. - Adjusted volume planning and dealer compensation initiatives by BMW may provide some relief, but we still see China as a pressure factor."

Western manufacturers are losing ground in China to local competitors such as BYD and Xiaomi, which offer feature-rich electric cars at low prices. Stiff competition in the world's largest car market is reducing profitability, which also affects Audi and Porsche, owned by Volkswagen, states Bloomberg. On October 7, Mercedes published data for the third quarter, which also showed a decline in sales in the PRC.

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