Bayerische Motoren Werke AG recently released its first-quarter 2026 financial report, showing a significant decline of approximately 25% in pre-tax profit compared to the same period last year. This comes as the company's management continues to emphasize the importance of the Chinese market while facing skepticism regarding its electric vehicle offerings.
An analysis of data from recent years reveals that the proportion of BMW's global sales contributed by the Chinese market has decreased from a peak of 33.5% to around 25.5% in the first quarter. China is no longer a super-pillar market accounting for "close to one-third" of sales. Furthermore, the latest quarterly report indicates that electric vehicles constituted only 6.6% of BMW's sales in China, a figure surprisingly lower than the 25.3% share seen in Europe. This contrast in data is notable.
Against this backdrop, key insights emerged from the first-quarter earnings press conference and subsequent investor call held on the 6th. This event marked the final earnings call for BMW Group CEO Oliver Zipse, who used the opportunity to thank the media and investors for their support since 2000.
During the analyst call, Zipse offered extensive commentary on the China strategy. He referenced observations from a recent auto show in China, subtly alluding to an impression of uniformity—where certain models in the market are becoming homogenized in technology and product presentation, emphasizing feature accumulation over system integration capabilities.
Zipse candidly told analysts that the automotive market should maintain diversity, including different powertrains, vehicle types, and price segments, rather than concentrating on a single technological pathway. His exact words were that it would be "worrying" if the entire industry focused on a singular technology path and product form.
However, with pressure mounting in the Chinese market, BMW's growth model is facing a new test. Regarding China, BMW appears to be attempting to improve profit margins amidst the reality of a lower sales ceiling. Yet, it remains to be observed whether Chinese consumers will be interested in European pure electric vehicles when comparable or superior models are available domestically, and what the true value of European brands is, according to analysis from Schmidt Automotive.
BMW has adopted a different strategy from Audi, adhering to a global design strategy, whereas the Volkswagen Group employs different design directions for various regional markets. In China, the moat for premium brands is far deeper than many assume. With new models launching, this will be a primary indicator to test the effectiveness of measures to reinforce that moat.
In the first quarter of this year, BMW's global sales of pure electric vehicles were approximately 87,000 units, significantly lower than the 110,000 units sold in the same period last year, accounting for 15.5% of total sales. Both China and the US saw noticeable year-on-year declines.
However, BMW's management does not attribute this solely to company-specific issues. The core problem, as explained by BMW Group CFO Walter Mertl, is indeed the decline in electric vehicle sales in China and the US. The reduction or elimination of subsidies for electrified vehicles has had a clear negative impact on BEV sales figures compared to the previous year.
Mertl further noted that while the overall Chinese market saw a 17% year-on-year sales decline in the first quarter, BMW's sales fell by only 10%, suggesting BMW's performance in China remains "relatively resilient."
Zipse maintains a distinct perspective on the electric vehicle market. He points out that pure electric vehicles currently constitute only about 30% of sales in China, with the remainder being other types of "new energy vehicles," a trend he believes will continue. Consequently, he argues that BMW's strategy should emphasize "flexibility" at the technological level.
A notable figure in this quarter's report is the global delivery volume, which decreased by 3.5% to 566,000 units. Deliveries in China accounted for approximately 144,000 units, representing about 25.5% of global sales. This proportion is roughly consistent with the full-year 2025 level.
Looking back, the Chinese market's share of BMW's global sales was around 29% in 2024. Between 2020 and 2023, this share remained consistently around one-third. It peaked at 33.5% in 2021, marking the height of BMW's reliance on China: one out of every three cars sold globally was delivered to a Chinese consumer. That period represented the peak of the upgrade cycle for traditional luxury internal combustion engine vehicles in China, while local new energy vehicles were still in their investment and growth phase, allowing traditional premium brands to enjoy significant advantages from their brand moats.
However, starting in 2024, the Chinese market's share of global sales dropped to 29%. Overall, over the five fiscal years from 2021 to last year, the market share in China declined by approximately 8 percentage points. The Chinese market's contribution to BMW's global sales has receded from one-third to around one-quarter. While no longer a "close to one-third" super-pillar, China remains BMW's largest single-country market, contributing over a quarter of its sales. China, alongside Europe and the US, continues to be one of BMW's three most crucial markets, with its performance being a key variable influencing the company's financial results.
Zipse highlighted that the Neue Klasse model showcased in China was developed through close collaboration between the local R&D team and local partners, designed to "better meet the specific requirements of Chinese customers." Using this as an example, he repeatedly emphasized the principle of "think global, act local."
In a similar analysis回应 to a JP Morgan analyst a month prior, Zipse stated that when examining the Chinese market, one must first recognize it as the largest automotive market globally by a significant margin. Being the largest market naturally leads to intense competition, a focus on innovation, and dominance by local manufacturers. In such a highly competitive environment, one must protect profitability but cannot expect profit margins as high as those in other markets. A good product will receive a positive response in China, which is no different from the European market, Zipse added.
He stressed at the time that vehicles sold in the Chinese market are essentially manufactured in China, for the Chinese market. Therefore, collaboration with Chinese suppliers and technology companies is essential.
Analysis from Schmidt Automotive predicts that the BMW Group will launch models based on the new sixth-generation pure electric architecture, "Neue Klasse," in the second half of 2026. Core components like the related operating system for this architecture are being developed specifically for Chinese consumer needs. This will provide BMW with an opportunity to counter the 10% year-on-year sales decline seen early in the year, helping to stabilize sales volumes for the current year and resume growth starting from 2027.
In response to a question from JP Morgan analyst José Asumendi during the investor call, Zipse pointed to a recent auto show in China as an example, noting that he observed most vehicles were electric—large SUVs emphasizing autonomous driving technology, almost creating a "monoculture."
Zipse expressed that the real market is far more diverse than what auto shows might suggest, and it should encompass different powertrains, with segmentation across vehicle types and price ranges. Large vehicles, SUVs, and electrification were the three keywords he highlighted, appearing to him as a paradigm many automakers are collectively betting on, concentrating competition within the same segment—particularly leading to homogenization in vehicle architecture.
Reiterating his concern, Zipse stated that if the entire industry concentrates on a single technology path and product form, it would be "worrying." He even pointed out that pure electric vehicle sales have recently shown significant declines in both China and the US, while demand for internal combustion engine vehicles has concurrently rebounded. This shift demonstrates the importance of maintaining an open attitude towards all segments and technologies, validating the correctness of BMW's strategic direction, according to the company.
BMW believes the cooling of the electric vehicle market in China represents a structural change. Its luxury logic centered on "multiple powertrains, strong residual value, and technological integration" will become the core of future competition.
Defining a premium car, Zipse explained that the future lies in product quality, particularly long-term quality. If a car enters the used car market within two or three years and its value plummets, it holds little significance. Therefore, he questions what the residual value of a car is after two, three, or even five years? It's not about the accumulation of features, but about their functionality evident during driving. Finally, safety is paramount; Zipse believes it will be the most important criterion for premium cars in the future—ensuring risk-free driving.