BMW cuts its 2569 profit target to 1-3% due to a slump in the Chinese market and pressure from the Middle East.

BMW has lowered its 2569 profit margin forecast to just 1-3% from a previous maximum of 6%, following a sharp drop in sales in China and the impact of the Middle East conflict.

On June 17, 2026, at 2:10 PM, Bloomberg News reported that BMW Group significantly lowered its profit forecast for its vehicle manufacturing business in 2026. The company now expects profit margins to fall to just 1-3% from a previous estimate of up to 6%. This reflects the impact of weaker-than-expected sales in China, as well as pressure from conflicts in the Middle East affecting consumer confidence and global energy costs.

Following the announcement, BMW shares plummeted by as much as 11.5% during trading, their sharpest drop in nearly two years, and bringing the share price down approximately 27% since the beginning of the year.

BMW also announced an extension of its cost-cutting measures into 2569, which will result in the company recording a one-time extraordinary expense in the second half of the year. While details on whether this will include job cuts have not been disclosed, it reflects the company's preparation for a worse-than-expected market environment.

This downward revision of forecasts comes just one month after Milan Nedeljkovic took over as the new CEO, replacing Oliver Zipse. One of his key tasks is to push forward new electric vehicles under the multi-billion euro Neue Klasse project.

However, the Chinese market, BMW's largest market, is facing a slowdown more severe than the company had estimated. The company had originally expected to maintain sales in China at around 50,000 units per month throughout 2568-2569, but first-quarter sales fell 10% year-on-year, and the situation worsened in April and May, resulting in a cumulative 17.6% drop in sales by May.

Although BMW was previously seen as having an advantage over competitors like Mercedes-Benz Group and Volkswagen Group due to its more flexible strategy in the transition to electric vehicles, continuing to produce a variety of vehicle types including internal combustion engines, hybrids, and electric vehicles, this strategy has recently failed to mitigate the impact of the slowdown in the Chinese market.

Analysts believe that Europe's luxury car industry is facing a structural shift as Chinese consumers become more cautious with their spending, local Chinese car manufacturers become more competitive, and the cost of exporting high-priced cars from Europe becomes less advantageous for them.

Jefferies stated that the market had already anticipated a possible earnings warning from BMW, but this sharp decline in profit margins was greater than investors had expected.

JPMorgan Chase views BMW's significant downward revision as a warning sign to the entire European automotive industry, particularly in China where European luxury car manufacturers are losing competitiveness in the small and mid-size car market.

In addition to problems in China, BMW is also facing slowing sales in Europe, while major manufacturers like Volkswagen, Mercedes-Benz, and Stellantis have already begun reducing production. Analysts expect BMW may have to cut production globally, especially in Europe.

The company also stated that the impact of the conflict in the Middle East was more severe than initially estimated, coupled with higher energy prices and weaker global consumer confidence, leading the company to expect a significant decrease in profit and free cash flow in the second quarter.

BMW has also lowered its forecast for vehicle deliveries this year from a previously expected flat position to a "slight decline," while maintaining its dividend payment policy and share buyback program as planned.

The company is scheduled to release its official second-quarter earnings on July 30th.

Reference: www.bloomberg.com

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