BMW shares fall 7% after China slowdown, cuts guidance

Shares of BMW fell 7% on Tuesday after the company issued a profit warning, pushing the stock to its lowest level since November 2020 and weighing on other European automakers.

The warning, published after markets closed, lowered the automotive EBIT margin forecast to 1%–3% from a prior 4%–6% range. BMW reduced its return on capital employed for the automotive division to 1%–5% from 6%–10% and said group profit before tax will decline significantly compared with an earlier forecast of a moderate decrease.

BMW attributed the revision to weaker demand in China and the wider Asia‑Pacific region, where conditions deteriorated further in the second quarter and competition intensified. The company said weaker results in Asia‑Pacific more than offset stronger performance in Europe and the United States.

The automaker also cited higher costs linked to the conflict in the Middle East, noting that elevated energy prices have raised expenses and that geopolitical uncertainty has weakened consumer sentiment in some markets.

The profit warning followed a management change: Milan Nedeljkovic took over as chief executive weeks after Oliver Zipse left the role. BMW said it will intensify cost‑cutting and warned of a negative one‑off impact in the second half of 2026, a notice that has prompted speculation about possible structural changes to production and sourcing.

Analysts reacted to the scale of the downgrade. Deutsche Bank reduced its price target on BMW shares to €90 from €100 while keeping a buy rating. Deutsche Bank analyst Tim Rokossa wrote that the downgrade was larger than expected and reversed earlier assumptions, adding that “there are now more questions than answers” and that upcoming investor events may provide limited clarity.

Jefferies lowered its price target to €70 from €92 and retained a hold rating. Jefferies wrote that the outlook revision points to a potential rethinking of BMW’s global manufacturing footprint, suggesting greater integration of sourcing and production in North America and China to reduce reliance on exports of internal‑combustion components from Germany. “It seems to us that BMW could be rethinking a global assembly business model,” the firm wrote.

The warning also hit peers: shares of Volkswagen and Mercedes‑Benz fell as investors reassessed the sector’s outlook. For months, China’s auto market has shown weakening demand; new vehicle sales recorded an eighth consecutive monthly decline in May, increasing pressure on foreign manufacturers and intensifying competition from domestic Chinese brands.

BMW said it will continue monitoring market developments and provide updates at scheduled investor events. The company did not provide a revised full‑year numerical target beyond the reduced margin and return on capital ranges.