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Automotive · BMW · China · Outlook
German automajor BMW Group significantly trimmed its fiscal 2026 outlook, now projecting a substantial decrease in group profit before tax and lowering its Automotive Segment EBIT Margin to 1-3% from 4-6%, citing negative developments in China, the Middle East conflict, and a one-time charge for efficiency measures.
The company stated these effects will contribute to a significant year-over-year decline in profit and free cashflow during the second quarter. For the full year, BMW Group now anticipates a "significant decrease" in group profit before tax, a downgrade from its previous estimate of a "moderate decrease." Automotive segment deliveries are now expected to "slightly decrease" from the previous year, contrasting with the earlier projection of being flat.
The Automotive Segment Return on Capital Employed (ROCE) is now forecast between 1 percent and 5 percent, down from the prior expectation of 6 percent to 10 percent. The negative development in the Chinese automotive market accelerated in the second quarter, particularly for non-electric vehicles, leading to intensified competition across China and the Asia-Pacific region, as reported by the China Passenger Car Association.
This sales decline in Asia-Pacific offset positive sales volume growth in Europe and the U.S. Furthermore, BMW Group projects a higher impact from the Middle East conflict than previously expected, contributing to elevated energy prices and dampened global consumer sentiment. A one-time negative impact on earnings is also expected in the second half of 2026 due to accelerated cost reduction initiatives.
The dividend payout ratio of 30 percent to 40 percent of net income and the ongoing share buyback program remain unchanged, with Automotive Free Cashflow expected to be above 2.5 billion euros. BMW shares closed down 0.64 percent at 67.90 euros on XETRA following the announcement.
