German luxury carmaker BMW Group has lowered its full-year profitability forecast as declining sales in China, rising trade tariffs and restructuring costs weigh on its financial performance.
The Munich-based manufacturer announced on Wednesday that it would accelerate cost-cutting measures, streamline management structures and phase out selected older vehicle technologies as it prepares for the wider rollout of its next-generation Neue Klasse models.
READ: Chinese, German car companies boost cooperation amid industry shift
BMW now expects its automotive division to record an operating profit margin of between -0.5% and 0.5% for 2026, significantly below its previous forecast of 1% to 3%. The revised outlook comes despite the group reporting third-quarter earnings before tax of €2.08 billion (approximately R40 billion), representing a 10.6% decline compared with the corresponding period last year.
For the first nine months of 2026, earnings before tax fell 23.9% to €6.13 billion (R113.6 billion). BMW delivered 551,075 vehicles globally during the third quarter, down 6.3% year-on-year, while cumulative deliveries declined 4.9% to 1.71 million vehicles.
China emerged as a major concern, with quarterly sales falling approximately 25% amid intense competition in the world’s largest automotive market. Growth in Europe and the United States, where quarterly deliveries increased by 2.6% and 2.5% respectively, was insufficient to offset the Chinese market’s weakness.
BMW’s automotive division reported third-quarter operating earnings of €901 million (R16,6 billion), a decline of 39.7%. Higher import tariffs also weighed on profitability, reducing the automotive operating margin by approximately 1.25 percentage points.
Restructuring, electric vehicles take centre stage
BMW Group CEO Milan Nedeljković said the challenging operating environment required faster implementation of structural changes.
“Current developments in our industry call for decisiveness and swift implementation. We will therefore specifically intensify and accelerate structural measures,” he said.
The company plans to accelerate reductions in management functions and increase operational efficiencies across development, procurement and production.
BMW is also banking on its Neue Klasse electric vehicle technology to improve future profitability. Strong demand for the new-generation models has prompted additional production shifts, allowing the manufacturer to accelerate the phase-out of selected older models and fifth-generation battery technologies.
The company is increasingly deploying artificial intelligence to automate administrative processes and improve operational decision-making.
READ: BMW 3 Series enters electric era with new i3 confirmed for SA
Despite the weaker earnings outlook, BMW maintains its forecast that automotive free cash flow will exceed €2.5 billion (R46,3 billion) for the full year. Chief financial officer Walter Mertl said the restructuring programme was intended to strengthen future margins and competitiveness.
BMW expects global vehicle deliveries to finish moderately below 2025 levels, highlighting the continued pressure facing established premium manufacturers as competition intensifies and the industry transitions towards electrification.
- German luxury carmaker BMW Group has lowered its full-year profitability forecast as declining sales in China, rising trade tariffs and restructuring costs weigh on its financial performance.
- The Munich-based manufacturer announced on Wednesday that it would accelerate cost-cutting measures, streamline management structures and phase out selected older vehicle technologies as it prepares for the wider rollout of its next-generation Neue Klasse models.
- READ: Chinese, German car companies boost cooperation amid industry shift BMW now expects its automotive division to record an operating profit margin of between -0.5% and 0.5% for 2026, significantly below its previous forecast of 1% to 3%.
- The revised outlook comes despite the group reporting third-quarter earnings before tax of €2.08 billion (approximately R40 billion), representing a 10.6% decline compared with the corresponding period last year.
- For the first nine months of 2026, earnings before tax fell 23.9% to €6.13 billion (R113.6 billion).
