BMW Reports Lower Second-Quarter Profit Amid Thousands of Planned Job Cuts

Weak sales in China and the impact of the situation in the Middle East on consumer sentiment weighed on BMW's financial results in the second quarter. 

The company reported a 35% decline in quarterly profit before tax to about $2.0 billion. The operating margin in its core automotive business fell to 2.3%, exceeding analysts' forecast of 2.2% but below the 5.4% recorded a year earlier.

CEO Milan Nedeljković said he intends to review the company's core business model following the disappointing results. He told analysts during a conference call on July 30 that the first- and second-quarter performance cannot be considered acceptable.

Nedeljković said he plans to make the company's structure leaner through a voluntary employee departure program and by reviewing the model lineup, including both electric vehicles and internal combustion engine vehicles.

On July 29, BMW announced plans to cut several thousand jobs by the end of 2027 through a voluntary separation program. The company did not disclose the exact number of positions to be eliminated, though available information indicates the total could reach up to 8,000 jobs, or about 5% of the automaker's workforce.

The company reaffirmed its full-year forecast, targeting an operating margin of 1% to 3% for its automotive division after lowering its outlook in June because of conditions in China and the Middle East, which later led to talks with employees over workforce reductions. Chief Financial Officer Walter Mertl said the forecast range includes a 1.25-percentage-point impact related to workforce restructuring.

BMW's global vehicle sales fell 5% in the second quarter, driven by a 30% decline in China. Industry experts had previously warned that the brand's new Neue Klasse electric vehicles could reach the market too late as China's technology-focused auto market continues to evolve rapidly.

The prolonged downturn in China's auto market, the world's largest, is increasing pressure on foreign automakers operating in the country, while Chinese competitors facing restrictions in the U.S. market are increasingly looking to Europe as a growth opportunity.