BMW Bets on iX3 Orders and Aggressive Buybacks as China Shock Triggers Deep Cost Cuts
22.06.2026 - 02:51:32 | boerse-global.de
The Bavarian automaker is sending mixed signals to the market. Even as it slashes its profit outlook and prepares to negotiate job cuts with labour representatives, BMW is ploughing ahead with a €2 billion share buyback and racing to fill order books for its new electric models. The juxtaposition underscores the delicate balancing act facing chief Milan Nedeljkovi? as he tries to steer the group through its gravest crisis in years.
The centrepiece of the turmoil is a dramatic downgrade to profitability. BMW now expects an EBIT margin of just 1 to 3 percent in its automotive division, down from a previous target as high as 6 percent. Free cash flow is set to halve to roughly €2.5 billion, from an earlier forecast of €4.5 billion. Management blames the deepening slump in China, where total passenger car sales collapsed 20 percent last month. The pain is concentrated among combustion-engine models, whose volumes plunged nearly 40 percent, while battery electric and plug-in hybrid vehicles now account for more than 60 percent of the market. The environment has been further soured by the Middle East conflict, which has pushed up energy costs and weighed on global consumer demand.
To stem the bleeding, the board is drawing up a stringent cost-cutting programme. Talks with the works council are scheduled to begin shortly, and Nedeljkovi? has not ruled out headcount reductions. The restructuring measures will generate one-off charges in the second half of the year, the exact scale of which is to be quantified alongside the half-year results. In China, the Ministry of Industry and Information Technology recently revoked the independent manufacturing licences of eight local producers — including Brilliance Auto, BMW’s joint-venture partner. The BMW Brilliance Automotive joint venture is unaffected, with its contract running unchanged until 2040 and BMW holding a 75 percent controlling stake.
Should investors sell immediately? Or is it worth buying BMW?
The stock market reaction was swift and brutal. BMW shares closed Friday at €60.38, shedding nearly 12 percent on the week and leaving the year-to-date decline at 37 percent. The price now sits barely a dollar above its 52-week low of €58.80, while the relative strength index has plunged to 20.5, a reading that signals deeply oversold conditions. Analysts have rushed to cut their price targets: UBS reduced its from €88 to €70 (neutral), Deutsche Bank from €100 to €90 (buy), and JPMorgan from €100 to €82 (overweight). Moody’s has also weighed in, revising its outlook on BMW to negative while leaving the long-term credit rating unchanged for now.
Yet amid the gloom, the company is pressing on with its share repurchase programme. In the middle of June, BMW bought back more than 420,000 common shares for around €29 million. The overall buyback, which runs until spring 2027, has a volume of €2 billion and the acquired shares are cancelled. Goldman Sachs has suggested BMW could even step up the pace of purchases given the depressed price. Despite the profit hit, BMW has kept its payout ratio target of 30 to 40 percent, though analysts widely expect a significant dividend cut.
On the product side, the picture is far brighter. The all-new electric iX3 has racked up more than 50,000 orders in Europe, soaking up nearly all the capacity at the new Debrecen plant in Hungary for 2026. A lower-cost entry version, the iX3 40, is set to launch this summer. BMW has also brought forward the start of orders for the i3 electric saloon to this week, with production at the Munich plant on track for August. A China-specific variant of the iX3 will be assembled in Shenyang, and the group plans to roll out more than 40 new models based on its next-generation architecture by 2027.
The coming months will be defined by the cost of the turnaround. Once management nails down the precise numbers for the second-half restructuring charges and the scope of the savings programme, the market will have a clearer gauge of how deeply the China crisis will cut into shareholder returns. For now, investors are left weighing a generous buyback against an uncertain dividend future.
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