BMW’s operating profit from making and selling cars fell sharply during the third quarter as lower deliveries and intense competition in China weighed on its car division where €901m earnings before interest and tax dropped 39.7% from €1.49bn last time.
Group net profit fell 14.7% to €1.45bn while revenue declined 5.8% to €30.5bn. Pre-tax profit decreased 10.6% to €2.08bn.
The results came a day after BMW issued the second profit warning this year, lowering its full-year automotive operating margin forecast to between -0.5% and 0.5%.
That compares with its previous forecast of between 1% and 3% and means the division could fall into an operating loss for the full year.
BMW however stressed that its underlying car business is still expected to make an operating margin of more than 2% in 2026 although this will be offset by the significant cost of measures to accelerate restructuring and the production of newer models and technology. The impact of tariffs are however expected to have an ongoing impact.
Milan Nedeljković, chairman of the board of management at BMW, said: “Current developments in our industry call for decisiveness and swift implementation. We will therefore specifically intensify and accelerate structural measures.”
China decline pulls down deliveries
BMW delivered 551,075 cars during the quarter, a decline of 6.3% while deliveries across the first nine months were down 4.9% to 1.71 million. Chinese deliveries dropped 24.8% during the quarter, offsetting increases of 2.6% in Europe and 2.5% in the US.
Battery electric vehicle deliveries provided a more positive result, rising 7.2% to more than 110,000. Electric cars now represent 20% of group deliveries globally and 34.7% in Europe.
Earlier model changes?
Strong demand for Neue Klasse models has prompted BMW to add production shifts and bring forward the phase-out of some older generation vehicles and battery technology.
For dealerships, the faster transition could provide earlier access to newer electric models and give sales teams a stronger product proposition against newer Chinese and European rivals.
However, it could also shorten the selling window for outgoing models as well as require earlier investment in product training, workshop preparation and customer communications.
Rella Suskin, equity analyst at Morningstar, commenting on the results, said BMW’s results reflect the reality facing much of the European auto sector right now
“BMW’s latest results don’t change the broader investment case. China remains a headwind, and the decision to accelerate restructuring has prompted another trim to guidance.
“While the further downward revision to year-end guidance was unexpected, we see BMW’s urgency in reducing its cost base as a positive long-term development. In this environment of heightened competition, we believe big and bold restructuring choices will create a more resilient company long term.
“BMW’s ability to ramp up production of its Neue Klasse range ahead of schedule highlights the company’s longstanding manufacturing flexibility advantage over Western peers. With rapid battery electric vehicle adoption in Europe, a greater mix of Neue Klasse vehicles supports the company’s journey to historic high operating margins.”