Profits Fall at BMW as it Blames China and Middle East Volatility

BMW shares dropped 10% on Wednesday following Tuesday’s announcement that it has lowered its outlook for 2026.

Key to BMW’s downturn is a fall in demand from the ‌Chinese market along with the  impact the Iran war has taken on German energy prices, hitting consumer confidence.

BMW is expected to downgrade its operating margin to between 1% and 3%, down from 4% to 6% previously, with a slight decrease in deliveries expected in 2026.

Along with that, profit before tax is expected to fall significantly, with BMW stating it will “decline of more than 15%”. This is quite a remarkable and rapid change compared to the previous year.

BMW CEO Milan Nedeljković said it will "significantly intensify and accelerate cost cutting measures as a result” and that it would cut "current structures and processes to the drastic downturn in market conditions".

BMW said it would lead to a negative one-off in the second half of 2026 as it attempts to quickly change and adapt to a declining market.

Many European manufacturers are feeling the hit from China with Volkswagen, Porsche, ⁠Mercedes-Benz and BMW all affected by a very tough market with Chinese brands often undercutting competition on price.

With China being the worlds largest car market, European and North American sales don’t cover the losses. And despite the domestic and North American markets, BMW and other manufacturers have a tough few years ahead as a large source of income is negatively impacted with no sight of a turnaround in China. This is only compounded when volatility hits oil producing regions, and with the Straight of Hormuz closed, oil deliveries faltered putting pressure on supply, increasing the price of crude oil to the west. We’ve seen the impact of prices at the pumps, with goods and services – including food prices – all rising.

However, BMW has the all-new i3 launching in the summer that could increase sales with a very compelling electric car. And the i3 could not arrive soon enough for the Bavarian company which will rival the likes of the Mercedes CLA EQA, Tesla Model 3 and BYD Seal.

And with the impact of the Iran war, consumers have been choosing electric cars and plug-in hybrids in great number, and BMW has these available across most of its range.

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Graeme Cobb is a lifelong car enthusiast with a passion for writing about cars, EVs, industry updates and more.

You can find Graeme on 𝕏 at @graeme_cobb .