BMW Group is stepping up cost reductions and organizational reforms after a sharp deterioration in profitability during the first half of 2026.
The German premium carmaker insists that demand remains healthy in Europe and that its Neue Klasse electric offensive is gaining momentum. Still, weaker sales and pricing in China, tariffs, and rising depreciation are weighing heavily on earnings.
29.4% profit drop
BMW Group deliveries fell by 4.2% in the first six months of the year, while revenue declined by 8% to €67.7 billion. Pre-tax profit dropped much faster, falling by 29.4% to €4.05 billion.
The Automotive division’s operating margin narrowed from 6.2% to 3.6% over the half year and reached only 2.3% in the second quarter. BMW has consequently reduced its full-year Automotive EBIT margin forecast from 4% to 6% to just 1% to 3%.
The group now expects global deliveries to decline slightly in 2026, while pre-tax profit is forecast to fall significantly. Automotive free cash flow dropped by 45% in the first half and by more than 70% in the second quarter.
Pressure from China
China is the main source of the pressure. BMW Group deliveries there fell by 20.4% in the first half and by 30.2% in the second quarter as local manufacturers increased competition and transaction prices came under pressure.
Europe moved in the opposite direction. Deliveries increased by 5.4% in the first half and by 7.6% in the second quarter, making the region an increasingly important counterweight to BMW’s difficulties in China.
Tariffs reduced the Automotive margin by around 1.25 percentage points in the second quarter, while higher depreciation related to BMW Brilliance Automotive cost another 1.2 points. The group also faced negative currency effects, higher raw-material costs, and weaker used-car revenues.
Voluntary severance packages
BMW Chairman Milan Nedeljković said the company would respond by simplifying structures, reducing fixed costs, and accelerating decisions. The first measures include voluntary severance packages for employees in indirect functions in Germany, although no specific job cuts have been announced for Belgium or Luxembourg.
The restructuring will initially entail its own costs. BMW estimates that the program could reduce the 2026 Automotive margin by as much as 1.25 percentage points, with the savings becoming visible from 2027.
BMW also plans to reduce investment, research and development spending, and administrative costs. It wants to use artificial intelligence and digitalization to shorten development cycles and automate internal processes.
Rethink the European sales model
The changes go beyond a conventional savings program. BMW intends to rethink its European sales model, move from a wholesale-oriented organization toward a more retail-focused approach, and integrate online and physical sales more closely.
This could lead to more centralized pricing, stock management, digital leads, and customer data. Dealers would increasingly focus on advice, delivery, service, and local customer relationships.
BMW will also review the number of technologies, powertrains, and model variants it offers. The group continues to defend its technology-open strategy, but future variants will face stricter profitability tests and will be adapted more closely to regional demand.
The Neue Klasse remains central to BMW’s recovery plan, and its first commercial results provide some grounds for confidence. Incoming orders for the new iX3 are approaching 100,000. At the same time, the Debrecen plant has already produced 50,000 vehicles within nine months of starting series production, the fastest ramp-up achieved by a new BMW Group factory.
A second shift was introduced ahead of schedule to meet demand. The i3 is at an earlier stage, but BMW says its Launch Edition attracted strong initial orders after the order books opened earlier than planned in June.
Regular ordering will begin at the end of September. BMW plans to introduce more than 40 new or substantially revised models by the end of 2027, gradually extending Neue Klasse technology across its broader range.
BMW Belux is well-positioned
Europe is already driving BMW’s electric growth. Battery-electric deliveries in the region increased by 37.9% in the second quarter to 81,500 vehicles. Almost one in three BMW Group cars sold in Europe was fully electric.
That development is particularly relevant for BMW Belux. Belgium remains one of Europe’s most electrified company-car markets, with battery-electric cars accounting for 59% of professional registrations in the first half of 2026.
BMW is one of the main beneficiaries. The BMW X1 was Belgium’s most registered car, while the iX1 ranked as the country’s second most popular electric model. The new iX3 had already accumulated more than 3,000 registrations by mid-year.
BMW Belux is therefore well positioned to benefit from the Neue Klasse rollout. Its main challenge will be to reduce its dependence on tax-driven fleet sales and reach more private customers, who remain considerably less willing to choose a fully electric car.
Financing and leasing will play an increasingly important role in that effort. BMW Financial Services’ share of group sales increased from 43.7% to 52.9%, underlining how central monthly payments, residual values, and remarketing have become to the group’s commercial strategy.
BMW maintains that it can return to an Automotive margin of between 8% and 10% by the beginning of the next decade. Achieving that goal will depend on whether strong European demand and the Neue Klasse can compensate for China’s decline while the group cuts costs without weakening its product offensive.
