BMW’s auto margin beats forecasts as cost cuts, new models support earnings

German automaker BMW reported a slightly better-than-expected profit margin from its automotive business in the second quarter, supported by lower spending and strong demand for new models.

The company said Thursday that its automotive earnings before interest and taxes (EBIT) margin stood at 2.3% during the April-June period.

Although the figure was sharply lower than a year earlier, it exceeded market expectations and remained within BMW’s full-year forecast range of 1% to 3%.

BMW said new vehicles, including the iX3 sport utility vehicle from its Neue Klasse lineup, continued to attract strong demand, while orders for the i3 sedan, launched in June, were also robust.

Chief Financial Officer Walter Mertl said competition in the global automotive industry had “sharpened noticeably.”

The company said tariffs imposed on vehicle imports into the US and Europe reduced its automotive EBIT margin by about 1.25 percentage points during the quarter.

BMW also faced unfavorable foreign exchange movements, higher commodity costs, and weakening demand in China, its largest individual market.

The automaker is accelerating cost reductions after achieving savings of €2.5 billion ($2.9 billion) last year.

Its latest restructuring plan includes cutting around 8,000 jobs, equivalent to roughly 5% of its workforce. BMW reached an agreement with employee representatives this week to begin offering severance packages.

The company is also increasing its use of artificial intelligence in vehicle development to improve efficiency and reduce expenses.

China remains BMW’s most significant challenge 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.

BMW’s vehicle sales in China fell below those in the Americas during the second quarter for the first time in a decade.

Deliveries in the US and Europe remained stronger, with US sales rising nearly 12% during the quarter.

BMW confirmed its 2026 outlook and said it aims to return to its long-term automotive EBIT margin target of 8% to 10% by the beginning of the next decade.