BMW’s Half-Year Report Lays Bare the China Crisis: Margins Halved, 8,000 Jobs Cut, and a New Course Ahead
Published on 07/30/2026 at 16:21 | Redaktion boerse-global.de
The numbers BMW released on Thursday painted a stark picture of an automaker caught in a perfect storm. Net profit for the second quarter tumbled by more than a third to €1.2 billion, while revenue slipped 7.9 percent to €31.3 billion. For the first half as a whole, the group earned €2.9 billion, down from €4.0 billion in the same period last year. The auto division bore the brunt of the pain: its operating margin shrank from 5.4 percent to just 2.3 percent, and EBIT collapsed by 60 percent to €629 million. Group-level EBIT fell 39 percent to €1.63 billion.
The culprit, as it has been all year, is China. Sales there dropped by nearly a third in the quarter, a decline so steep that strong performances in Europe and the US could only partially offset it. Chief Executive Milan Nedeljkovi?, who took the helm amid this turbulence, described the results as “not satisfactory” during the earnings call, pointing to a rapid deterioration in China, the rise of new competitors across Asia-Pacific, Latin America, and Europe, and additional headwinds from tariffs, trade barriers, currency effects, tighter regulation in Europe, and the Middle East conflict.
A Margin Target That Speaks Volumes
BMW had already flagged trouble in June, when it slashed its full-year margin forecast for the auto division from 4–6 percent to 1–3 percent in an ad-hoc announcement. Thursday’s half-year report confirmed that nothing has improved since. The first-half delivery figures, released on July 10, told the story: global sales fell 4.2 percent to 1,156,742 units, dragged down by a 20.4 percent plunge in China that gains of 5.4 percent in Europe and 3.0 percent in the US could not overcome.
Chief Financial Officer Walter Mertl quantified one of the hidden burdens: restructuring costs for 2026 will eat up 1.25 percentage points of the margin. And there is a bigger risk lurking — internal estimates suggest a potential 15 percent US import tariff could cost BMW more than €1 billion in profit. Despite all this, the group is sticking to its lowered margin forecast of 1 to 3 percent.
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8,000 Jobs on the Line as BMW Reshapes Its Cost Base
In response to the earnings squeeze, BMW announced a sweeping overhaul of its cost structure. Some 8,000 positions will be eliminated worldwide, representing roughly 5 percent of the group’s 154,000 employees. In Germany, nearly half of the domestic workforce — about 40,000 of the 84,000 staff — will receive voluntary severance offers. The program runs from October 2026 through the end of 2027, with no compulsory redundancies planned. The cuts target administration, research and development, planning, and management, with a particular focus on the Munich headquarters. Production and overseas plants are exempt. BMW has already set aside a three-digit million-euro provision for 2026 to fund the program.
Nedeljkovi? also signaled a deeper rethink, saying the company would scrutinize core processes and structures once considered untouchable, and streamline the product portfolio. That includes a market-specific split between electric and combustion-engine models — more EVs for China, more combustion vehicles for the US.
A Glimmer of Hope: The New Class and Battery Push
Amid the gloom, BMW’s next-generation vehicle architecture offers a ray of optimism. The company has already built more than 50,000 units of the “Neue Klasse” electric SUV, the iX3, and orders are approaching 100,000. Medium-term, the group is targeting an operating margin of 8 to 10 percent by the start of the next decade — a far cry from the current 1–3 percent range.
On the technology front, BMW started series production of sixth-generation high-voltage batteries at its Woodruff plant in South Carolina, destined for the upcoming iX5 built at the neighboring Spartanburg facility. That positive signal was tempered, however, by a recall notice from Germany’s KBA last Friday: 744,234 vehicles across the 2 Series through 7 Series, X3 through X7, Z4, and i3 models from model years 2020 to 2026 are affected by a starter relay defect that could cause a fire risk.
Boardroom Changes and a Capital Structure Cleanup
The leadership transition at BMW extends beyond the CEO’s office. The supervisory board decided at the May 13 annual general meeting to appoint Dorothea von Boxberg to the management board effective September 1, 2026. Meanwhile, the capital structure is being streamlined: all non-voting preference shares were converted into common shares with voting rights on June 30, following the AGM resolution.
Despite the weak operating performance, BMW is pressing ahead with its share buyback program. Between July 20 and July 26, the company repurchased 634,883 of its own common shares.
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Analysts Split on the Outlook
Wall Street’s view on BMW remains divided. HSBC upgraded the stock from “Hold” to “Buy” on July 22, setting a price target of €71.00, arguing that China risks are now largely priced in after the year-to-date selloff. Deutsche Bank Research reaffirmed its “Buy” rating with a €90.00 target on Tuesday, just before the half-year numbers, but warned of persistent margin pressure from price competition in Asia.
The stock itself has stabilized somewhat after a brutal stretch. It traded at €60.42 on Thursday, up 7.13 percent from the 52-week low hit on July 24, and gained 5.81 percent over the past week. But the recovery is fragile: the shares are still down roughly 35 percent year-to-date, and sit more than 38 percent below the 52-week high from December. The 200-day moving average of €79.71 is a distant memory, with the stock trading about 24 percent below that level.
Investors may take some comfort that the cost-cutting program at least shores up the guidance, but a genuine turnaround remains elusive. All eyes now turn to the Capital Market Day scheduled for September 29, where BMW is expected to flesh out its “Neue Klasse” strategy in greater detail.
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