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BMW has cut its profit guidance for 2026 as the disruption caused by the Iran war added to European carmakers’ struggles in the Chinese market.
The Munich-based auto manufacturer was forecasting a “significant” decrease in its pre-tax profits this year, it said on Tuesday. BMW had previously forecast profits before tax to fall moderately from last year’s figure of €10.2bn.
BMW said it also expected the operating margin in its automotive division to be between 1-3 per cent this year, far below its previous guidance of 4-6 per cent.
“The impact of the conflict in the Middle East on our global business extends beyond our original assumptions,” BMW said. Elevated energy prices as a result of the war were raising costs and weighing on profits, while the conflict had dented global consumer sentiment, it added.
The company now expects sales to drop slightly from last year, when it sold roughly 2.5mn cars, despite the rollout of a new range of highly anticipated electric vehicles.
The projected decline was also in part the result of falling sales in China, where European auto manufacturers have struggled to hold their market share in the face of intense competition from domestic EV makers. BMW said the negative trend in the Chinese market had “accelerated further” in the second quarter.
The combined effect of the war in Iran and the challenges in China would lead to a “significant decline in profit” in the second quarter, it said.
BMW said it would increase cost-saving measures as it looked to counter the pressures on the European auto industry. The move would show up as a one-off cost in the second half of 2026, although BMW did not share any details of the measures or provide an estimate of the cost.
BMW has so far weathered the challenges faced by European carmakers better than its German rivals, avoiding large-scale job cuts or costly writedowns to its EV strategy. But its latest forecast of its operating margin for 2026 would put it behind both Volkswagen and Mercedes-Benz if all the companies’ projections were realised.
Volkswagen has said it expects its operating margin this year to sit between 4-5.5 per cent, while Mercedes-Benz’s car division anticipates a return on sales of 3-5 per cent.
The changing outlook is a challenge for BMW’s new chief executive Milan Nedeljković, who replaced Oliver Zipse at the helm of the company last month.
Nedeljković said the changes to BMW’s structures were needed to adapt to the “drastic downturn in market conditions”.
The former production chief said BMW needed to “significantly intensify and accelerate our ongoing measures. It’s all about speed and efficiency”.
BMW will publish its full second-quarter results on July 30.
