BMW slashes 2026 profit outlook as China slowdown and Middle East war batter earnings, sending shares lower and forcing a sweeping cost-cutting drive just weeks after a new CEO took charge. The Munich-based automaker now expects sharply lower deliveries and a steep decline in earnings before interest and tax (EBIT) for the full year, citing “acute imbalances” in China’s car market and soaring costs linked to the conflict in Iran.

On Tuesday, BMW confirmed it had cut its 2026 EBIT margin guidance to a range of 5% to 7%, down from the 7% to 9% range it had forecast in March . The company also warned that vehicle deliveries would fall short of earlier projections, blaming a “prolonged downturn” in China—where retail sales fell 0.6% year-on-year in May, the first decline since December 2022 . Urban fixed-asset investment contracted more sharply than expected, underscoring the depth of the slowdown in the world’s second-largest economy.

The revised outlook comes as BMW faces a dual shock: collapsing domestic demand in China and surging costs from disruptions to shipping and energy markets caused by the war in Iran. “The combination of weaker Chinese consumption and geopolitical tensions has created a perfect storm,” said a senior executive at BMW, speaking on condition of anonymity. The company’s after-hours share price dropped sharply following the announcement .

Newly installed CEO Stefan Weckbach, who took office just one month ago, has responded by launching an aggressive cost-cutting program. While the scale of job cuts in Munich remains unclear, sources at the company say every division is under review as BMW seeks to offset lost revenue and protect margins . The move reflects broader anxiety across Europe’s auto sector, where manufacturers are struggling to compete with a flood of cheaper Chinese exports that have surged despite U.S. tariffs .

Analysts warn that BMW’s predicament is symptomatic of deeper structural challenges. China, once a growth engine for German automakers, is now exporting its way out of trouble, relying on foreign consumers to absorb surplus production as domestic confidence wanes . The result is a “China Shock 2.0,” with surging exports threatening European manufacturers and prompting calls at the G7 for coordinated action .

BMW’s revised guidance also raises questions about Germany’s role in amplifying the crisis. Critics argue that Berlin’s electric-vehicle subsidies, including a new premium that benefits Chinese brands, have inadvertently fueled the influx of low-cost competitors . With the EU preparing new legislation to tighten rules on foreign subsidies, the pressure on policymakers to act is mounting.

For now, BMW’s leadership is focused on damage control. “We are taking decisive steps to safeguard our profitability and long-term competitiveness,” said a company spokesperson. But with China’s economy still weakening and geopolitical risks persisting, the road to recovery looks increasingly steep.

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