On July 30, BMW Group released its financial report for the first half of 2026, revealing declines across key metrics such as group revenue, profit, and sales in core markets.
BMW's profit declined in the first half of the year, with its automotive segment's EBIT margin dropping to 2.3% in the second quarter, as the Chinese market and tariff costs simultaneously squeezed profitability.
For the first half of 2026, BMW Group reported revenue of €62.266 billion, down 8% year-on-year. Net profit attributable to the parent company was €2.858 billion, a 25.75% decrease, while the overall gross margin fell to 14.13%, down 2.23 percentage points.
In the second quarter, the automotive division's earnings before interest and taxes (EBIT) were €629 million, with the margin shrinking to 2.3%, compared to 5.4% in the same period of 2025.
Globally, BMW delivered 1.1567 million vehicles in the first half of the year, a 4.2% decline year-on-year, though regional performance varied significantly.
Sales in Europe and the United States grew by 5.4% and 3.9% year-on-year, respectively, during the first half. However, the Chinese market was the primary drag on overall delivery declines.
In the first half of the year, BMW delivered 261,999 vehicles in the Chinese market, down 20.4% year-on-year. Second-quarter deliveries were approximately 117,800 units, a 30.2% drop from the prior year.
China's share of BMW's global sales fell from a peak of 33.5% to 22.6%, with Europe once again surpassing China to become the company's largest regional market.
The decline in BMW's Chinese sales highlights a mismatch between its product lineup and pricing strategy and the competitive dynamics of the Chinese market.
In early 2026, BMW reduced official prices across 31 models by 4% to 24%, with the flagship all-electric i7 seeing a price cut of up to 300,000 RMB.
However, first-half delivery data shows that the official price cuts have not reversed the sales decline. Relying solely on price adjustments seems insufficient to quickly generate growth in the fiercely competitive new energy vehicle market.
BMW's regional differences in electrification are also pronounced: in the second quarter, battery electric vehicles accounted for 19.8% of global deliveries, up 1.9 percentage points year-on-year, while in Europe, the share reached 31.3%.
In contrast, BMW's new energy vehicle deliveries in China accounted for just 6.2% of total sales. The overall penetration rate of new energy passenger vehicles in China had surpassed 60% by mid-2024, creating a significant gap.
Beyond the sales slump in China, tariffs and geopolitical factors are also compressing BMW's automotive segment profit margins. In its financial report, BMW noted that tariff increases had a negative impact of approximately 1.25 percentage points on the second-quarter EBIT margin of its automotive business.
BMW also mentioned that geopolitical tensions in certain regions have pushed up energy prices. The automotive segment's free cash flow in the first half was €1.29 billion, down nearly 45% year-on-year, indicating continued pressure on working capital.
Following the first-half performance decline, BMW Group has lowered its full-year financial expectations.
For the 2026 fiscal year, pre-tax profit is expected to decline significantly, and the guidance range for the automotive segment's EBIT margin has been reduced from 4%–6% to 1%–3%. To alleviate operational pressure, BMW is accelerating the implementation of cost-optimization measures.
During the earnings call, BMW Group CEO Milan Nedeljković confirmed that the company has reached a personnel restructuring agreement with labor unions and has introduced a voluntary severance program with accompanying compensation. The plan aims to cut approximately 8,000 jobs by the end of 2027, representing about 5.3% of the global workforce.
While managing current costs, BMW views its next product cycle as the primary lever to restore sales and profits.
According to its plans, BMW intends to launch over 40 new or refreshed models by the end of 2026, including the long-wheelbase versions of the 'Neue Klasse' BMW iX3 and BMW i3, developed specifically for the Chinese market. These models will be manufactured at the Shenyang production base and will integrate smart technology from local tech companies.
However, with terminal price expectations in the Chinese auto market already reset, formulating a competitive pricing strategy for the upcoming 'Neue Klasse' products will remain a severe challenge for BMW's management. For now, adjusting the structure and tightening spending to smoothly navigate the transition period before the model refresh has become a necessary, pragmatic choice for BMW.
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