BMW has sharply lowered its profit outlook for its automotive business and now expects a slight decline in vehicle deliveries this year, as the company commits to using artificial intelligence to improve operational efficiency.
BMW has once again cut its full-year guidance and warned that a key profitability metric for its core automotive business could fall into loss-making territory, while the group moves faster to implement its restructuring program.
The difficulties facing the entire automotive industry are intensifying, with several European automakers stepping up business overhauls: cutting jobs, adjusting product lineups, and in some cases even shifting development strategies.
In the world's largest auto market, China, an increasingly fierce price war, the overseas expansion of Chinese carmakers, and trade frictions are casting a shadow over the outlook for the European auto industry.
Under new Chief Executive Milan Nedeljkovic, BMW has pledged to reduce headcount and use artificial intelligence to boost efficiency. In September, BMW announced a one-fifth reduction in the number of departments and management positions; it had previously reached an agreement with labor representatives to cut thousands of jobs. Other German luxury carmakers — Mercedes-Benz, Audi, and Porsche — are also pushing forward with their own restructuring plans.
"The current situation in the industry requires us to make decisive decisions and implement measures quickly. We will therefore increase our efforts in a targeted way and accelerate structural reforms," Nedeljkovic said.
As a result of these factors, BMW cut its profit outlook for its automotive business sharply for the second time this year. The company expects the full-year EBIT margin for its core automotive business to range from -0.5% to +0.5%, with the lower end already in loss-making territory; in June, the guidance for this metric was still 1% to 3%.
BMW also expects vehicle deliveries this year to show a slight decline from 2025, having previously expected only a marginal dip.
BMW said the guidance adjustment stems from a non-operating loss that will be recognized in its fourth-quarter financial report, and that it has decided to expand and step up product and structural reforms.
BMW said that excluding the impact of restructuring, the full-year EBIT margin for its automotive business is still expected to be above 2%. Demand for its next-generation "Neue Klasse" models is strong, so the company is adding production shifts at its plants while phasing out previous-generation models and older technology platforms earlier than planned. The restructuring program will also be implemented faster than previously planned.
In the third quarter, BMW's net profit was 1.46 billion euros ($1.63 billion), down from 1.67 billion euros a year earlier. EBIT for the automotive segment plunged 40% to 901 million euros; hit by lower revenue, the segment's margin narrowed to 3.4% from 5.2% a year earlier. Still, the result was above the analyst consensus of 794 million euros.
The group's overall EBIT was 1.59 billion euros, down 30% year on year, compared with a market consensus of 1.71 billion euros. Dragged down by China, vehicle shipments fell, and group revenue dropped to 30.45 billion euros from 32.31 billion euros; analysts had expected quarterly revenue of 29.85 billion euros, so the actual figure was slightly above expectations.
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