German automaker Bayerische Motoren Werke AG (BMWYY) is set to reduce its global workforce by up to 7,700 positions. Concurrently, the company has revised its performance outlook for 2026 downwards, marking the third consecutive year of such guidance adjustments.
The Chinese market, once responsible for roughly one-third of the group's sales and a long-standing profit driver, has now become a significant drag on BMW's performance. The recent appointment of a new CEO for China, Krijntan, raises the question of whether he can steer the market back to growth.
Third Consecutive Guidance Cut Following China's Three-Year Downturn
On June 16, 2026, the BMW Group issued its third consecutive annual profit warning, lowering its full-year performance guidance. The group now anticipates the EBIT margin for its automotive segment to be between 1% and 3%, down from the previous range of 4% to 6%. The return on capital employed (ROCE) for the automotive business is also expected to fall to 1%-5%, revised from 6%-10%. Full-year vehicle deliveries are now projected to see a slight decline, adjusted from an earlier forecast of being largely flat. Group pre-tax profit is expected to decrease significantly year-over-year.
Management acknowledged in a conference call that the ongoing deterioration in the China and Asia-Pacific markets is the core reason for this profit warning. The company stated that the Passenger Car Association (PCA) has further lowered its full-year sales forecast for the Chinese passenger vehicle market. Intensifying price competition in China means that growth in European and American markets cannot offset the impact of declining sales in China. Additionally, persistent tensions in the Middle East are driving up energy and logistics costs, further increasing operational pressure.
In June of this year, the PCA's Secretary-General indicated that the decline in China's domestic passenger vehicle retail sales for 2026 is expected to narrow to 11%. According to PCA statistics, retail sales for the first five months of 2026 fell 19.5% year-over-year to 7.099 million units.
This marks the third year in a row BMW has cut its outlook. In September 2024, citing weak demand in China among other factors, BMW lowered its full-year guidance, reducing the automotive EBIT margin forecast from 8%-10% to 6%-7%. In 2025, the company again stated that sales recovery in China was below expectations, and local banks had reduced commissions on auto finance, impacting dealer profitability. This forced BMW to provide more financial support to dealers, leading to another downward revision of the full-year pre-tax profit forecast.
First-quarter 2026 results also reflected the pressure. The BMW Group reported revenue of 31.007 billion euros, down 8.1% year-over-year. Pre-tax profit fell 24.6% to 2.348 billion euros, with the automotive EBIT margin at just 5%. Global sales for the quarter declined 3.5% to 565,800 vehicles. While the European market saw approximately 3% growth, China emerged as the largest drag on BMW's global performance.
China was once a core growth region for BMW. In 2019, BMW surpassed Mercedes-Benz and Audi to become the sales leader in China's luxury car segment. The market long contributed about one-third of the group's total sales, making it BMW's largest single market globally. However, starting in 2024, as competition in China's new energy vehicle sector intensified, BMW began experiencing consecutive slowdowns. Sales in China fell 13.4% in 2024, dropped another 12.5% in 2025, and continued to slide by over 10% in the first quarter of 2026. Currently, China's share of BMW's global sales has declined from a peak of around 33.5% to 25.5%.
Despite this, the BMW Group has emphasized it will not reduce its long-term commitment to the Chinese market. During the Q1 conference call, the former Chairman stated that the 7 millionth BMW produced in China would roll off the production line at the Shenyang plant in 2027, and the company would further deepen its local R&D, procurement, and decision-making systems. Subsequently, however, the former Chairman departed the group, and the former CEO of BMW China also formally left his post. The newly appointed CEO for China, Krijntan, has now taken full charge of Chinese operations.
Compared to his predecessor, who had years of experience in the Chinese market, Krijntan is a typical BMW global executive. Company information shows he joined BMW's German headquarters in 1998, holding roles responsible for MINI's German business and sales in Nordic markets. He served as CEO of BMW Germany in 2024 before being transferred to lead BMW's most important overseas market.
New Management Emphasizes Cost-Cutting Amid Global Workforce Reduction
In its revised performance guidance, the BMW Group indicated it would intensify its 2026 cost-saving plan, accelerating organizational optimization and operational efficiency measures, with the benefits expected to materialize in subsequent years.
Recent reports citing union sources state that BMW plans to reduce its global headcount by up to 5% by the end of 2026. Based on the current workforce of approximately 155,000, this equates to around 7,700 positions. However, the company currently prefers achieving this adjustment through natural attrition, early retirement, and controlled hiring rather than large-scale forced layoffs. The Group's Works Council stated the company would maintain full communication with employees to proceed with organizational optimization in a more stable manner.
Previously, BMW had emphasized job stability. In early 2025, facing a significant sales decline in 2024, BMW China publicly stated it would not achieve cost savings through layoffs. At that time, a senior production executive expressed the view that the company aimed to navigate industry changes through a stable talent system rather than simple job cuts, noting significant investment in employee training and retraining.
At the end of 2024, BMW's total headcount reached 159,000, a net increase of 4,154 from the previous year. However, the eventual outcome shows the group has begun controlling its workforce size. By the end of 2025, total employees had decreased by 4,564 year-over-year, shifting from expansion to contraction.
Compared to its peers, BMW's adjustments remain relatively moderate. Rival Volkswagen Group has announced plans to cut around 50,000 jobs in Germany, with a global optimization target of up to 100,000 positions over several years. Another luxury brand, Mercedes-Benz Group, is advancing a second round of organizational optimization, with its Beijing sales service company expected to reduce staff from about 900 to under 600, extending adjustments from sales to R&D and manufacturing.
Cost control has become an imperative for BMW's current management. As the Chinese market transforms from BMW's largest growth engine into a significant variable dragging down global performance, the time available for the new leadership team to implement adjustments is rapidly diminishing.
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