Munich: German automaker BMW has reported a slightly better-than-expected profit margin from its automotive business in the second quarter, attributed to reduced spending and strong demand for its new models. According to Anadolu Agency, BMW's automotive earnings before interest and taxes (EBIT) margin was recorded at 2.3% during the April-June period.
This figure, although significantly lower than the previous year, exceeded market expectations and stayed within BMW's full-year forecast range of 1% to 3%. The company noted that new vehicles, such as the iX3 sport utility vehicle from its Neue Klasse lineup, continued to draw strong demand, with robust orders for the i3 sedan, which was launched in June.
Chief Financial Officer Walter Mertl highlighted the increased competition in the global automotive industry. The company disclosed that tariffs on vehicle imports into the US and Europe negatively impacted its automotive EBIT margin by about 1.25 percentage points during the quarter.
BMW also faced challenges from unfavorable foreign exchange movements, higher commodity costs, and declining demand in China, its largest individual market. In response, the automaker is accelerating cost reductions after achieving savings of £2.5 billion ($2.9 billion) last year.
The latest restructuring plan involves cutting around 8,000 jobs, approximately 5% of its workforce, with an agreement reached with employee representatives to begin offering severance packages. BMW is also increasing its use of artificial intelligence in vehicle development to boost efficiency and cut expenses.
China remains a significant challenge for BMW as local manufacturers, including electric vehicle producers such as BYD and Xiaomi, gain market share amid weak consumer demand and a prolonged property-sector downturn. For the first time in a decade, BMW's vehicle sales in China fell below those in the Americas during the second quarter.
Deliveries in the US and Europe remained stronger, with a nearly 12% increase in US sales during the quarter. BMW has confirmed its 2026 outlook and aims to return to its long-term automotive EBIT margin target of 8% to 10% by the beginning of the next decade.
Source: Anadolu Agency