BMW Warns Again: Its Car Business Could Slip Into an Operating Loss

BMW has issued its second profit warning in less than five months. Late on Tuesday the German premium carmaker cut its 2026 automotive operating margin forecast to between minus 0.5% and plus 0.5% — a range that includes an outright operating loss at its core car business — and on Wednesday morning it reported third-quarter pretax earnings down 11% to €2.1 billion (about $2.4 billion), with revenue down 6% to €30.4 billion.

What happened

BMW cut its full-year guidance for the second time this year. In June it had already lowered its automotive margin outlook to 1% to 3%; the new range of minus 0.5% to plus 0.5% all but erases that margin once restructuring charges land in the fourth quarter. Without those one-off restructuring effects, BMW says the car business would still deliver a margin above 2% for the year.

The warning came hours before BMW published its third-quarter results on Wednesday. Pretax earnings fell 11% to €2.1 billion, in line with the company-compiled analyst consensus, while group net profit fell to €1.46 billion from €1.67 billion a year earlier. The operating margin in the core automotive business narrowed to 3.4%, ahead of the 3.1% analysts expected but well down from 5.2% a year earlier, and automotive earnings before interest and taxes plunged about 40% to roughly €901 million.

Why it is blowing up

BMW is one of Europe's flagship premium brands, so a forecast that its car business could post an operating loss lands far beyond one company's share price. Frankfurt-listed BMW shares fell about 3% in evening trade after Tuesday's warning, and the story is being read as the latest evidence of how hard Germany's car industry is being squeezed between costly restructuring at home and fierce, lower-cost competition in China.

The China numbers explain much of the pressure. BMW's sales in China — the world's largest car market — fell 22% in the first nine months of the year, as Western premium makers lose ground to domestic rivals. Group revenue fell 6% in the quarter largely because BMW shipped fewer cars into that weaker Chinese market.

The key facts

The restructuring: BMW is accelerating a cost-cutting programme that covers about 8,000 roles in its home market, with redundancies running faster than expected and producing larger severance charges in the fourth quarter. Management functions are also being cut more quickly, and new chief executive Milan Nedeljkovic has vowed to slim the workforce and use artificial intelligence to boost efficiency. Extra production shifts for the new Neue Klasse model line added further costs.

Deliveries and cash: BMW now expects automotive deliveries to fall moderately in 2026 — a decline of about 5% to 9.9% — having previously expected only a slight decline. It kept its target for automotive free cash flow above €2.5 billion, a detail investors watch as a sign the underlying business still generates cash even as reported margins shrink.

What happens next

The immediate question is the size of the fourth-quarter restructuring charge, which will decide whether the car business ends 2026 above or below zero on operating margin. Investors will also watch whether China sales stabilise and whether the Neue Klasse rollout can lift deliveries in 2027 without further margin damage. BMW is not alone: its warning follows a string of downgrades across Germany's auto sector, so rivals' updates will be read for the same China and cost pressures. This report describes what happened and how markets reacted; it is not a recommendation to buy, sell or hold any security.

Sources

Reuters via SRN News — BMW warns on profit again as restructuring costs bite
Dow Jones via TradingView — BMW cuts outlook again as restructuring costs deepen
investingLive — BMW issues second profit warning, says car business could slip into operating loss

FAQ

Why did BMW issue a profit warning?
BMW said faster-than-expected restructuring — about 8,000 roles in Germany, quicker management cuts and extra Neue Klasse production shifts — will create large fourth-quarter charges, while weak demand in China keeps sales under pressure.

What is BMW's new 2026 margin forecast?
BMW now expects an automotive operating margin between minus 0.5% and plus 0.5% for 2026, down from 1% to 3% set in June. Excluding restructuring effects, it still expects a margin above 2%.

How did BMW do in the third quarter?
Pretax earnings fell 11% to €2.1 billion, in line with analyst expectations, revenue fell 6% to €30.4 billion, and the core car margin narrowed to 3.4% from 5.2% a year earlier.

How did BMW shares react?
Frankfurt-listed shares fell about 3% in evening trade on Tuesday after the warning, according to Reuters, ahead of Wednesday's third-quarter results.