BMW Group has lowered its full-year 2026 guidance across key financial metrics, pointing to a deteriorating Chinese car market and the economic fallout from the Middle East conflict.
The German automaker now expects its automotive segment earnings before interest and taxes (EBIT) margin to come in at 1-3%, compared with prior guidance of 4-6%.
Return on capital employed (ROCE) for the same segment has been revised to 1-5%, against an earlier outlook of 6-10%.
Group profit before tax is now projected to decline significantly year-on-year, a steeper deterioration than the moderate decrease previously anticipated.
Automotive segment deliveries are forecast to record a slight decrease versus the prior year, having previously been guided at the prior year's level.
The company said conditions in the Chinese passenger car market worsened in the second quarter, particularly for non-electric vehicles, intensifying competitive pressure across China and the broader Asia-Pacific region.
Sales gains in Europe and the US were not sufficient to compensate for the shortfall.
Elevated energy prices linked to the Middle East conflict have added to cost pressures, while the associated uncertainty has weighed on consumer sentiment globally.
Both factors are expected to contribute to a significant decline in profit and free cashflow in the second quarter versus the prior year.
In response, BMW Group said it would “intensify and accelerate its ongoing cost reduction initiatives through further structural and efficiency measures”.
The company cautioned that these steps would carry a one-time negative impact on earnings in the second half of 2026, with financial benefits expected to materialise in subsequent years.
Automotive free cashflow guidance was maintained at above €2.5bn.
The company also confirmed its dividend payout ratio of 30-40% of net income attributable to BMW shareholders and its ongoing share buyback programme remain unchanged.
BMW Group said the ramp-up of the NEUE KLASSE platform remains on track, with more than 40 new and updated models planned for introduction by 2027.
The all-electric BMW iX3 and BMW i3 have received strong customer response, with the Debrecen plant in Hungary already running a two-shift schedule ahead of schedule to meet demand.
The group's half-year report is due for publication on 30 July 2026.
