BMW automotive operating profit drops nearly 40% in third quarter
BMW AG reported a 29.7% drop in group operational profit to 1.59 billion euros, driven by intense pricing pressure in China and mounting regulatory costs.
Across the entire business, which includes motorcycle manufacturing and financial services, the operational profit contraction mirrored severe stress in the core automotive division. Between July and September, the automotive EBIT dropped 39.7% on an annual basis. Selon un communiqué du groupe de Munich, l’Ebit automobile a diminué de 39,7% entre juillet et septembre sur un an, pour s’établir à 901 millions d’euros (823,3 millions de francs). The operational profit of the entire group, which also produces motorcycles and offers financial services, dropped by 29.7% to 1.38 billion Swiss francs, and net group profit fell by 14.7% year-on-year to 1.32 billion francs, beating FactSet platform analyst expectations who had forecast 1.09 billion.
BMW Sales Plummet as Local Competition Chokes Chinese Margins
Deliveries in China fell by a quarter to more than 114,000 vehicles as BMW confronted fierce competition from local manufacturers such as BYD and XPENG. Like its competitors Volkswagen and Mercedes, BMW is facing the competition of local manufacturers in China, where deliveries decreased by a quarter to more than 114,000 vehicles.
Additional operational friction compounded the losses in Asia. Asset impairment charges stemming from the revaluation of assets within the BMW Brilliance Automotive Chinese joint venture weighed down the margin by 1.2 percentage points. On top of those valuation adjustments, heavier customs tariffs directly shaved off another 1.25 percentage points from profitability during the quarter, alongside unfavorable exchange rate movements. The German manufacturer BMW announced Wednesday a drop of nearly 40% in the operating profit of its automotive division in the third quarter, due to its difficulties on the Chinese market, heavier customs duties and exchange rate effects.
Why Management Slashes 2026 Guidance and Accelerates Layoffs
Following the third-quarter slump, BMW lowered its financial targets for 2026 for the second time this year ahead of expected non-operational restructuring costs in the fourth quarter. The company now forecasts an automotive operating margin between -0.5% and +0.5%, leaving the door open for an outright operational loss in its primary division. It now projects an automotive operating margin between -0.5% and +0.5%, which means that a loss is possible within its most important division.
The group aims to eliminate 8,000 positions by 2027 and confirmed plans to reduce management functions more rapidly than initially scheduled. Like its competitors Volkswagen and Mercedes, BMW is in the midst of restructuring to massively reduce its costs to restore the profitability levels it previously knew. BMW is accelerating its cost-reduction plan, following the example of competitors Volkswagen and Mercedes who are also hit by the crisis. Signaling that BMW remains cautious regarding demand trends, notably in China, BMW now expects a “moderate” drop in its automobile deliveries this year, compared to only a “slight” drop previously. On the other hand, the share of 100% electric vehicles is forecasted to see a “slight increase” compared to 2025, rather than staying “at the same level.”
