German luxury carmaker BMW Group reported its first-half 2026 earnings on July 30, revealing continued profit pressure due to intensifying market competition, declining sales volume, and the impact of currency fluctuations, tariffs, and rising costs. The group's first-half profit before tax (EBT) fell 29.4% year-on-year, net profit attributable to shareholders dropped 25.7%, and the automotive segment's EBIT margin weakened to 3.6%. Despite this, BMW noted that demand in Europe and the US remains on the rise, and new-generation models are beginning to launch. The company will continue its cost-control efforts and product offensive, maintaining its full-year guidance, which was adjusted in mid-June.

Profitability under strain, car business margin slips to 3.6%

For the first half of this year, BMW Group recorded revenue of €62.266 billion, down 8% year-on-year. EBIT was €3.635 billion, a 37.4% decrease, while profit before tax reached €4.045 billion, down 29.4%. Net profit attributable to parent company shareholders was €2.858 billion, a decline of 25.7%. The group's pre-tax profit margin fell to 6.5% from 8.5% in the same period last year. In the second quarter alone, BMW generated revenue of €31.259 billion, down 7.9% year-on-year. Pre-tax profit was €1.697 billion, a 35.1% drop, and net profit stood at €1.2 billion, down 34.9%.

BMW's core automotive business continues to face headwinds. According to the financial report, first-half automotive EBIT was only €1.974 billion, a 45.6% decrease, and the automotive EBIT margin fell to 3.6% from 6.2% in the prior year. In the second quarter, this key metric further declined to 2.3%, notably lower than the 5.4% recorded in the same period last year. Free cash flow in the automotive segment was €1.29 billion, a 45% year-on-year drop. BMW pointed out that while spending on R&D and sales and administration decreased compared to last year, additional costs from the deteriorating competitive landscape in China, negative currency effects, higher depreciation and amortization, and rising raw material prices significantly eroded profitability. Furthermore, the US tariff hikes continue to affect the automotive business. BMW expects tariff factors to drag on the automotive EBIT margin by approximately 1.25 percentage points for the full year 2026, though this is an improvement from the roughly 1.5 percentage point impact in 2025. The company stated it will continue to advance cost control and accelerate organizational restructuring to enhance efficiency and profitability.

Global sales fall 4.2%, EV sales rebound in second quarter

In terms of sales, BMW Group delivered 1.1567 million vehicles globally under the BMW, MINI, and Rolls-Royce brands in the first half of the year, a 4.2% decrease year-on-year. BMW brand sales totaled 1.0047 million units, down 6.2%, while MINI sales rose 11.7% to 149,500 units, continuing its growth trend. Rolls-Royce sales were 2,523 units, a 9.8% decline. Regionally, BMW showed a clear divergence. European market sales increased 5.4% year-on-year, and US market sales rose 3.9%. However, sales in China plummeted by 20.4% year-on-year, making it the weakest-performing global market. In the second quarter, the sales decline in China further widened to 30.2%. BMW stated that the Chinese auto market environment worsened in the second quarter, with competition intensifying, and the company's sales decline in China was broadly in line with the overall market.

Despite the overall sales drop, BMW's electric vehicle business showed signs of improvement. In the second quarter, the group delivered 116,800 pure battery electric vehicles (BEVs) globally, a 5.2% increase year-on-year, accounting for 19.8% of group sales, up from 17.9% in the same period last year. Performance was particularly strong in Europe, where second-quarter BEV sales surged 37.9% year-on-year, pushing the share of pure electric models in European sales to 31.3%. However, due to the phase-out of new energy subsidies in the US and China, first-half global BEV sales still fell 7.4% year-on-year to 204,300 units, representing 17.7% of total group sales. BMW noted that its new-generation models have received positive market feedback since their launch. The company plans to introduce over 40 new or facelifted models by the end of 2027, steadily expanding the new-generation model platform technology across the entire product line.

BMW reaffirmed its full-year outlook, which was revised on June 16. The company expects global vehicle deliveries to be slightly lower than last year; the automotive EBIT margin is forecast to be between 1% and 3%; and group pre-tax profit is expected to decrease significantly.