BMW Warns on 2026 Margins

Europe’s automakers are taking heavy hits: BMW warned its already-thin profit margins could dip below zero by 2026, and third-quarter profits are down nearly 40%. Suppliers like Schaeffler are slashing thousands of jobs, and Volvo Car shares tanked after announcing more cuts. The pressure isn’t just a passing slump—structural issues are piling up, from plunging China sales (down 25–31% for German brands) to razor-thin margins on electric vehicles. Meanwhile, Europe’s climate goals and trade policies are in flux, adding more uncertainty and chilling major investments.

But here’s the catch: while Europe’s automakers scramble, China’s car industry is flooding global markets. Domestic demand in China has softened, prompting a surge in exports that’s pushing prices down, especially in electric vehicles. European profits are being squeezed as a glut of Chinese EVs enters the market, while the EU scrambles to cap imports and buy time. Across the Atlantic, North America is tightening its own operations—Stellantis just sold a Canadian plant while GM jumps to the Nasdaq, both moves signaling a shift towards leaner, tech-focused strategies. And in Mexico, a booming auto loan market is fueling record sales, giving manufacturers some breathing room as they prep for the next wave of hybrids and electrics.

Based on reporting from Bruegel, Automotive News, Mexico Business News, and Motor1.com.

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