China slump hits BMW’s earnings, prompting restructuring call

Published Thu, Jul 30, 2026 · 03:26 PM

[BERLIN] A severe slump in Chinese sales and the hit to consumer sentiment from the Middle East dealt a blow to BMW’s earnings in the second quarter, the company said on Thursday (Jul 30), pledging deeper cuts to steel itself against tough competition.

The premium carmaker reported a 35 per cent drop in quarterly pretax earnings to 1.7 billion euros (US$1.95 billion).

The operating margin in the core automotive business narrowed to 2.3 per cent. This beat analysts’ forecast of 2.2 per cent but was down from 5.4 per cent a year earlier.

“The automotive industry is faced with rapidly escalating challenges – intense global competition, increasing regional regulatory requirements and the implications of geopolitical conflicts will shape our business model in the years ahead,” chief executive officer Milan Nedeljkovic said.

BMW, however, confirmed its full-year guidance, targeting an operating margin for cars in the range of 1 to 3 per cent, after a shock profit warning in June which triggered negotiations with workers over cuts.

The company now plans to axe 8,000 jobs under an agreed voluntary redundancy programme, a source said on Wednesday.

“Competition in the global automotive market has sharpened noticeably,” finance chief Walter Mertl said.

Porsche and its parent Volkswagen are also in the process of overhauling their operations, having announced deep job cuts in recent weeks, with Volkswagen also weighing plant closures.

BMW’s sales volume declined by about 5 per cent globally in the second quarter, dragged lower by a 30 per cent fall in China, where industry observers have warned that the brand’s new suite of electric vehicles could come too late in a runaway, tech-driven market.

A protracted downturn in the Chinese car market, the world’s biggest, has increased pressure on foreign carmakers there while Chinese rivals barred from the US now look to Europe for growth. REUTERS