The BMW Group is holding its course in an increasingly competitive environment, accelerating measures to address a significant downturn in China and a challenging global operating landscape.
As an initial step, the company has reached an agreement with its Works Council on an extensive workforce restructuring program that includes voluntary severance packages.
Milan Nedeljković, Chairman of the Board of Management of BMW AG, said the automotive industry faces rapidly escalating challenges — intense global competition, tightening regional regulation, and geopolitical conflict — all of which will shape the business in the years ahead. He said staying lean and agile is essential, and that BMW is reshaping its organization and processes to remain competitive.
In the second quarter, sharply negative developments in China, intensified Asia-Pacific competition, and the ongoing conflict in the Middle East clearly weighed on performance. Group pre-tax earnings came in at €1,697 million, down 35.1%, with an EBT margin of 5.4%; for the first half, EBT reached €4,045 million, down 29.4%, with a 6.5% margin. The Automotive Segment’s EBIT margin stood at 2.3% for the quarter, while segment free cash flow totaled €513 million, down 73.4%.
Deliveries Slip Globally, But Europe and US Grow
BMW Group delivered 1,156,727 BMW, MINI and Rolls-Royce vehicles worldwide in the first half of the year, down 4.2% from 1,207,594 a year earlier; Q2 deliveries reached 590,947 units, down 4.9%.
Europe and the US both posted growth in the first half — up 5.4% and 3.9% respectively — with that growth accelerating further in the second quarter to 7.6% in Europe and 11.9% in the US. China told a different story, with the negative trend accelerating during the period: first-half deliveries fell 20.4% to 261,773 units, while Q2 deliveries dropped 30.2% to 117,815 units.
MINI brand deliveries rose sharply, up 17.1% to 81,032 vehicles in the second quarter and 149,535 units for the half, up 11.7% year-over-year. Fully electric models drove much of that growth, accounting for 36.9% of MINI’s total deliveries in the first half — meaning more than one in three MINIs sold was fully electric, up from 34.3% a year earlier.
Electric Vehicle Sales Continue to Climb
BMW Group delivered 116,807 fully electric vehicles between April and June, up 5.2% year-over-year, though first-half BEV deliveries fell 7.4% to 204,295 units. Fully electric vehicles now account for nearly one in five deliveries overall, at 19.8%.
In Europe specifically, BEV sales continued climbing following the March launch of the BMW iX3, reaching 81,500 units in the second quarter — up 37.9% year-over-year — with nearly one in three new vehicles delivered in the region now fully electric, at 31.3%, compared with 24.4% a year earlier.
Demand for the Neue Klasse continues growing with each new model. The BMW iX3, the platform’s first model, remains on track to reach 100,000 orders since launch.
The second Neue Klasse model, the BMW i3, has also seen strong early demand following the start of its Launch Edition ordering phase in June, while the BMW 7 Series and all-new BMW X5 have both received extremely positive feedback since their world premieres — with the X5 bringing Neue Klasse technology to five different drivetrain variants.
Nedeljković said the Neue Klasse and its technologies represent a strong, innovative product portfolio at the forefront of the industry, with customer feedback and demand remaining consistently strong.
Revenue Declines as Cost Reduction Continues
BMW Group reported first-half revenue of €62,266 million, down 8.0% from €67,685 million a year earlier (down 6.1% adjusted for currency effects); Q2 revenue reached €31,259 million, down 7.9%. Increased competitive pressure and lower sales volumes weighed on the year-over-year comparison.
Research and development spending declined moderately as planned, to €3,714 million for the first half, down 7.6%. Capital expenditure fell significantly as planned as well, to €1,900 million for the half — down 30.5% — with the capex ratio dropping to 3.1% from 4.0%. Sales and administrative expenses also declined moderately, to €4,777 million for the year to date, down 6.1%.
Walter Mertl, Member of the Board of Management responsible for Finance, said competition in the global automotive market has sharpened noticeably. Following €2.5 billion in cost savings last year, he said BMW is intensifying and accelerating efficiency measures alongside targeted structural changes, aiming to reduce complexity and establish a sustainably lower cost base.
He pointed to digitalization and artificial intelligence as already generating positive momentum across the company, including using industrial data combined with AI in the Development division to shorten cycles in virtual vehicle validation.
Automotive Segment Earnings Under Pressure
Automotive Segment revenue declined moderately to €54,321 million for the first half, down 7.4%, weighed down by lower sales volumes and intense competition. EBIT for the segment fell 45.6% to €1,974 million for the half, with earnings impacted by China’s market weakness, higher depreciation and amortization, and currency and commodity headwinds that cost reductions could only partially offset.
The segment’s Q2 EBIT margin came in at 2.3%, down from 5.4% a year earlier, including headwinds of roughly 1.25 percentage points from import duties in the US and EU, and around 1.2 percentage points from depreciation tied to BBA purchase price allocation. Automotive Segment free cash flow totaled €1,290 million for the first half, down 45.0%, with full-year free cash flow projected above €2.5 billion.
Financial Services Segment Sees Contract Growth
In Financial Services, new financing and leasing contracts rose 5.0% to 866,088 for the half, with the penetration rate climbing to 52.9% from 43.7%.
The segment reported first-half profit before tax of €1,008 million, down 15.4%, largely due to an increased provision for a UK customer compensation program set aside in the first quarter. Second-quarter profit before tax rose to €627 million, up 15.7%, driven by higher portfolio volume and resulting interest income.
BMW Group 2026 Guidance Confirmed
Despite the challenges outlined, BMW Group confirmed its guidance for the 2026 financial year: a slight decline in Automotive Segment deliveries versus the previous year, an Automotive Segment EBIT margin of 1-3%, a significant decrease in Group earnings before tax, Automotive Segment RoCE of 1-5%, Financial Services return on equity of 13-16%, and Motorcycles segment deliveries broadly in line with the previous year, with an EBIT margin of 4.0-6.0% and RoCE of 10-14%.