BMW Tumbles to 5-Year Low on Iran War, China Slowdown
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- BMW shares fell 6.5% to their lowest level in over five years after the carmaker warned pre-tax profit for 2026 would decline "significantly," with management saying positive volume in Europe and the U.S. "cannot compensate for the sales decline in China and Asia Pacific."
- Citi analysts cut their China sales assumptions for BMW by more than 50,000 units and now project total BMW sales will fall below 500,000 by year-end, adding that the stock's undervaluation "may persist" given the absence of any positive equity narrative.
- Deutsche Bank analysts said BMW's conference call left them with "more questions than answers," criticizing the lack of a comprehensive update on the company's cost base and structure.
- Volkswagen and Mercedes-Benz shares came under pressure alongside BMW, with VW CEO Oliver Blume having previously cited "wars, geopolitical tensions, trade barriers, stricter regulations, and intense competition" as headwinds for the group.
- European carmakers are losing ground to Chinese rivals that have rapidly expanded EV exports across Europe, the U.K., Asia, and Australia, building factories and supply chains on the continent.
- Ineos Automotive and Daimler Truck both announced plans this week to produce military vehicles, the latest automakers pivoting toward the defense industry as Europe's military spending rises.
Why it matters: BMW's warning crystallizes how exposed European luxury automakers are to a triple shock: collapsing Chinese demand, Iran war-driven energy costs, and structural pressure from Chinese EV rivals expanding into Europe. Citi's explicit warning that BMW's undervaluation may persist — with no obvious catalyst — signals investors should expect no quick reprieve, and the spillover into VW and Mercedes shares shows the same headwinds hitting the entire sector.
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