By Al Root

BMW stock fell Wednesday, dragging down shares of other European auto makers after a shocking cut to guidance that boils down to a weakening Chinese auto market.

Shares of the German car maker were down 6.6% in overseas trading. Mercedes-Benz Group shares were down 3%. Volkswagen and Stellantis shares were both down about 1.6%.

The drops came after BMW cut its 2026 automotive profit margin guidance to 1% to 3%, down from 4% to 6%. That means BMW's car division will earn closer to $3 billion in operating profit, instead of $7 billion.

"BMW blamed the sharp cut to guidance on an acceleration in the negative development of the China passenger car market in [the second quarter], which had triggered a more intense competitive environment in China and in other countries in the Asia Pacific region," wrote Bernstein analyst Stephen Reitman on Wednesday. "This could not be offset by positive volume developments in Europe and the U.S.A."

He called the cut a "rare misstep" from BMW. The company reiterated its 4% to 6% guidance as recently as May. Oxcap analyst Stuart Pearson called the cut a shock in a Wednesday report.

BMW is the sector's "most resilient operator," Pearson added. "This raises unwelcome memories of 2008/09, the last time BMW's margins were this low."

That was around the Financial Crisis. It was also a low for BMW stock.

The Financial Crisis was an acute problem. The issues in China, including brutal competition and slowing sales, seem more chronic in nature.

The news isn't great for U.S. auto makers either. Tesla is the most exposed to China. It generated 2025 sales of $21 billion in the country, accounting for more than 20% of total revenue.

China is the largest new car market in the world and the largest market for all-electric cars.

Tesla stock was down 0.2% in premarket trading, while S&P 500 futures were up 0.1%.

Write to Al Root at allen.root@dowjones.com

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June 17, 2026 07:42 ET (11:42 GMT)

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