For years, BMW AG stood apart from rival German carmakers when it came to withstanding the pain of increased competition in China.<\/p>\n
But after a drastic profit warning that sent its shares tumbling on Wednesday, the tables have turned: the China slump has prompted the Bavarian company to project a potential margin this year that puts it on course to be the least profitable major European automaker.<\/p>\n
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Of course, that could still change. BMW\u2019s bleaker outlook may portend more trouble for its rivals. It\u2019s among the first to clearly state that the war in the Middle East is hurting consumer sentiment around the world.<\/p>\n
That drop in demand may weigh on mass-market auto companies including Renault SA and Stellantis NV, according to analysts at Oxcap Analytics.<\/p>\n
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Read: BMW, Mercedes China sales plunge as luxury slowdown worsens<\/p>\n
The bigger headache for BMW right now is the deepening slump in China, its largest market. As recently as March, BMW was projecting stable sales in the country. Now, the manufacturer is saying that business there is down about 18% this year through May.<\/p>\n
The China skid may cause similar problems for Mercedes-Benz Group AG, which like BMW still generates about a third of its earnings in the country, the Oxcap analysts said in a note.<\/p>\n
\nOn 31 March, when Mercedes offered a forecast, the company said that it expected the China car market to be \u201cslightly below\u201d last year\u2019s level.<\/p>\n<\/blockquote>\n
Volkswagen AG\u2019s accounting of its joint ventures in China means there\u2019s less of a direct hit on the group\u2019s operating returns, said Michael Dean, an analyst at Bloomberg Intelligence. Even so, the JVs have already forecast a brutal year in the world\u2019s largest car market, Dean noted.<\/p>\n
Then there\u2019s Porsche AG, which may also avoid major China pain this year, but only because it\u2019s already suffered so much in the country. Only about 10% of its unit sales come from China these days, down from roughly a third in 2022, Dean said.<\/p>\n
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Read:
Audi\u2019s future hinges on winning back China
BYD extends German car sales lead over Tesla with 1 000% surge
One in 10 cars sold in Europe is now made by a Chinese brand<\/p>\nUltimately, BMW\u2019s reduced targets offer more evidence that Germany\u2019s premium carmakers will need to keep rethinking their old business models.<\/p>\n
It\u2019s no longer possible to earn so much by selling high-margin combustion-engine vehicles in China that were mostly designed and built in Germany.<\/p>\n
With new chief executive officer Milan Nedeljkovic planning a capital markets day in late September, BMW may be drawing up plans for more sourcing and integration work to take place in North America and China, Philippe Houchois, an analyst at Jefferies, wrote in a note.<\/p>\n
\u00a9 2026 Bloomberg<\/p>\n<\/p><\/div>\n
#BMW #profit #warning #puts #rock #bottom #among #Europes #carmakers<\/p>\n","protected":false},"excerpt":{"rendered":"
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