BMW Cuts Outlook as Middle East War, China Woes Weigh — Update

By Joshua Kirby

BMW cut its outlook for the year as the Middle East conflict takes a heavier toll than expected and competition heats up in the key Chinese market.

The German carmaker said Tuesday that it now expects a slight fall in automotive sales over the course of 2026 compared with a year earlier, having previously guided for flat growth. The operating margin in the company's mainstay automotive division will meanwhile likely be within a range of 1%-3% for the year, a weaker estimate than the 4%-6% BMW had previously expected. The segment last year booked a margin of 5.3%.

Pretax earnings should meanwhile see a significant decrease from last year; the group previously guided for only a moderate decrease.

Free cash flow in the automotive segment should be above 2.5 billion euros ($2.90 billion), the company said, compared with the 3.24 billion euros it booked for 2025. A dividend ratio of 30%-40% of group net profit isn't affected by the cut to the outlook, and neither is a current share-buyback program, BMW said.

A tough market in China is behind the cloudier outlook, the Munich-based group said, pointing to lower estimates for total sales in the overall Chinese auto market.

"This has resulted in a more intense competitive environment in China and in other countries in the Asia Pacific region," the company said. "The BMW Group cannot operate in isolation of this situation."

Better developments in sales in Europe and North America aren't enough to offset falls in China and the wider region, the company added.

Conflict in the Middle East is also hitting the company's performance more than previously thought, BMW said. Energy prices remain elevated, driving the company's costs higher. The prolonged war has meanwhile dampened drivers' desire to splash out on new cars around the world, the company said.

The dimmer view for the year contrasts with the confident tone set by the company last month. Then, BMW executives said they were confident of recovery in China, where subdued demand also dragged the group's sales last year.

The growing headwinds dragged the company's bottom line significantly lower in the second quarter of the year, BMW said. The group's financial performance over the remainder of the year will be hit by efficiency measures aimed at mitigating the current challenges, it said.

"The benefits will be visible in the following years," BMW said.

Write to Joshua Kirby at joshua.kirby@wsj.com; @joshualeokirby

(END) Dow Jones Newswires

June 16, 2026 13:01 ET (17:01 GMT)