BMW slumps after profit warning amid Iran war and China slowdown

Shares in BMW tumbled to their lowest level in over 5 years on Wednesday after the German carmaker cut its 2026 profit outlook, citing a slowdown in Chinese demand and disruption caused by the Iran war.

In a statement released Tuesday morning, the carmaker said that “positive volume developments in Europe and the USA cannot compensate for the sales decline in China and Asia Pacific.”

BMW added that elevated energy prices driven by the war in Iran are weighing on costs, as well as “negatively impacting consumer sentiment across markets around the world.”

The group’s pre-tax profit is now expected to fall “significantly,” the firm added. Its shares were last seen down 6.5%. 

Deutsche analysts said in a note published Wednesday that BMW’s conference call left them with “more questions than answers”, and were left concerned by the lack of a “comprehensive update on the company’s structures and costs.” 

Upon the news, Citi analysts reduced their reduced China sales assumptions by over 50k units and anticipate total sales will fall below 500k by the end of the year. 

“With no obvious positive equity narrative, with full-year earnings still under downward pressure, with a structural thematic negative industry trend, with continued industry-punishing EU regulations, and with a limited number of investors in European value names, we think BMW’s undervaluation may persist,” the analysts added. 

The profit warning weighed on the broader European auto sector, with shares in BMW’s German rivals Volkswagen and Mercedes-Benz coming under pressure.

Volkswagen in April reported weaker-than-expected first-quarter profit, citing higher U.S. tariffs and intensifying competition from Chinese car brands.

Its CEO Oliver Blume cited “wars, geopolitical tensions, trade barriers, stricter regulations, and intense competition” as headwinds facing the group.

European carmakers continue to lose ground to their Chinese rivals. China has rapidly expanded its EV footprint throughout Europe, the U.K., Asia and Australia, exporting millions of competitively priced vehicles, building factories and widening supply chains.

The sector is increasingly turning to the defense industry, spotting an opportunity to collaborate and capitalize upon the continent’s rise in military spending. 

Ineos Automotive and Daimler Truck became the latest auto companies to announce their intentions to produce military vehicles this week.