Bayerische Motoren Werke AG's Q2 Profit Margin Hits Five-Year Low; Company Announces Workforce Reduction

On July 30, Bayerische Motoren Werke AG released its financial report for the first half of 2026. In this semi-annual report, key indicators such as group revenue, profit, and sales volume in core markets all showed varying degrees of decline.

Bayerische Motoren Werke AG's profit declined in the first half, with the Automotive segment's EBIT margin in the second quarter dropping to 2.3%. Both the Chinese market and tariff costs simultaneously compressed profit margins.

In the first half of 2026, Bayerische Motoren Werke AG achieved revenue of €62.266 billion, a year-on-year decrease of 8%; net profit attributable to parent company shareholders was €2.858 billion, a year-on-year decline of 25.75%; and the overall gross profit margin was 14.13%, a year-on-year decrease of 2.23 percentage points.

The Automotive segment's earnings before interest and taxes (EBIT) in the second quarter amounted to €629 million, with the profit margin falling to 2.3%, lower than the 5.4% recorded in the same period of 2025.

Bayerische Motoren Werke AG delivered 1.1567 million vehicles globally in the first half, a year-on-year decrease of 4.2%, but regional performance varied significantly.

Sales in the European and US markets grew by 5.4% and 3.9% year-on-year respectively in the first half, while the Chinese market became the main drag on the overall delivery decline.

In the first half, Bayerische Motoren Werke AG cumulatively delivered 261,999 vehicles in the Chinese market, a year-on-year decrease of 20.4%; deliveries in the second quarter were approximately 117,800 units, a year-on-year decrease of 30.2%.

The share of the Chinese market in Bayerische Motoren Werke AG's global sales dropped from a peak of 33.5% to 22.6%, with Europe once again replacing China as its largest regional market globally.

The decline in Bayerische Motoren Werke AG's sales in China exposes a mismatch between its product structure and pricing system and the competitive rhythm of the Chinese market.

At the beginning of 2026, Bayerische Motoren Werke AG lowered the official guide prices for 31 of its models, with reductions ranging from 4% to 24%. The price cut for its flagship pure electric model, the i7, reached up to RMB 300,000 at one point.

However, looking at the first-half delivery data, the official price cuts have not yet reversed the sales decline. Relying solely on price adjustments is difficult to quickly bring incremental growth in the fiercely competitive new energy vehicle market.

Bayerische Motoren Werke AG's regional differences in electrification are also evident: in the second quarter, the share of pure electric vehicles in global deliveries was 19.8%, an increase of 1.9 percentage points year-on-year; the share of pure electric vehicle sales in the European region reached 31.3%.

In contrast, the share of new energy vehicle deliveries by Bayerische Motoren Werke AG in China was only 6.2%. The overall penetration rate of new energy passenger vehicles in China exceeded 60% by mid-year, showing a significant gap between the two.

Beyond the sales decline in China, tariffs and geopolitics are also compressing Bayerische Motoren Werke AG's automotive business profit margins. The company pointed out in its financial report that tariff increases had a negative impact of approximately 1.25 percentage points on the Automotive segment's EBIT margin in the second quarter.

Bayerische Motoren Werke AG also mentioned that geopolitical tensions in some regions have pushed up energy prices. The free cash flow of the Automotive segment in the first half was €1.29 billion, a year-on-year decrease of nearly 45%, indicating that working capital remains under pressure.

Following the decline in first-half performance, Bayerische Motoren Werke AG lowered its full-year financial expectations.

Pre-tax profit for the 2026 fiscal year is expected to decline significantly, and the EBIT margin guidance range for the Automotive segment has been lowered from 4%–6% to 1%–3%. To reduce operational pressure, Bayerische Motoren Werke AG is simultaneously accelerating the implementation of cost optimization measures.

Milan Nedeljković, CEO of Bayerische Motoren Werke AG, confirmed during the earnings conference call that the company has reached a workforce restructuring agreement with the union and launched a voluntary departure plan with accompanying compensation. The plan aims to cut approximately 8,000 jobs by the end of 2027, accounting for about 5.3% of the total global workforce.

While controlling current costs, Bayerische Motoren Werke AG views the new product cycle as the main lever to repair sales and profits.

According to the plan, Bayerische Motoren Werke AG intends to launch more than 40 new modified models by the end of 2026, including the "New Generation" long-wheelbase versions of the BMW iX3 and BMW i3 developed for the Chinese market. These models will be manufactured at the Shenyang production base and integrate intelligent technologies from local tech companies.

However, in the current context where terminal price expectations in the Chinese auto market have already been reshaped, how to formulate competitive pricing strategies for the upcoming "New Generation" products remains a severe challenge for Bayerische Motoren Werke AG's management. Currently, adjusting structures and cutting expenditures to smoothly navigate the painful transition period before the model replacement has become an inevitable and pragmatic choice for Bayerische Motoren Werke AG.