BMW slashes profit outlook as China slowdown and Iran war hit earnings

BMW issued a sweeping profit warning on Wednesday, citing a sharp slowdown in China and the fallout from the ongoing war in Iran, as the German automaker slashed its financial outlook and launched a fresh round of cost-cutting measures. The move sent shares in the Munich-based company tumbling and deepened concerns across Germany’s embattled automotive supply chain.

The company’s shares plunged after Reuters reported the warning, which was triggered by weaker-than-expected demand in China—the world’s largest car market—and disruptions linked to the conflict in Iran, a key supplier of raw materials and shipping routes . BMW’s management did not provide specific figures but acknowledged that both factors had materially eroded its earnings outlook for the year. The announcement follows a broader downturn in the German auto sector, where suppliers are already grappling with declining investment and hiring freezes.

The profit warning comes as BMW joins a growing list of European automakers scaling back expectations amid geopolitical instability and shifting consumer behavior. Earlier on Wednesday, Volkswagen revealed it would use sealed bids to sell a $10 billion engine unit, a move aimed at avoiding conflicts of interest after concerns arose that a private equity bidder had gained an unfair advantage by partnering with major shareholders . The decision underscores the mounting pressures facing the industry, from supply chain bottlenecks to regulatory hurdles.

German auto suppliers are feeling the strain acutely. A survey published Wednesday by Reuters found that investment and hiring plans have fallen sharply, with executives citing “darkening” business sentiment as orders dwindle and costs rise . The trend reflects a broader retrenchment in the sector, where companies are bracing for prolonged weakness in China—a market that had long been a pillar of growth for European automakers.

BMW’s response includes a raft of cost-cutting initiatives, though details remain scarce. The company’s decision to revise its guidance comes just days after local media reported that executives were preparing for a “significant” downward adjustment to profit forecasts . Analysts warn that the combination of geopolitical risks and structural challenges in China could force further retrenchment across the industry, with ripple effects for jobs and investment in Germany’s automotive heartlands.

For now, BMW’s warning serves as a stark reminder of how quickly global headwinds can upend even the most resilient corporate strategies. With no immediate resolution in sight for the Iran conflict or the slowdown in China, the company—and its peers—face a prolonged period of uncertainty.