The manufacturer’s automaking Ebit margin came in at 2.3% in the period, BMW said Thursday. While that’s sharply down from year ago, it was slightly ahead of estimates and within the 1% to 3% forecast range for this year.

Competition in the global auto industry has “sharpened noticeably,” chief financial officer Walter Mertl said in a statement. Still, new models like the iX3 SUV, the first model of BMW’s Neue Klasse lineup, continue to sell well with the i3 sports sedan, launched in June, seeing strong orders.

The Bavarian carmaker is looking to accelerate cost cuts after resetting expectations. Challenges range from the slumping business in China to the fallout of the Middle East conflict and US tariffs. Import duties to the US and Europe shaved BMW’s Ebit margin by about 1.25 percentage points in the second quarter, the company said Thursday. 

BMW is also dealing with unfavourable currency swings, higher commodity prices and increased costs from depreciation and amortisation, it said.

The main new lever for cuts, following savings of €2.5 billion (US$2.9 billion) last year, is a plan to shed 8,000 jobs, roughly 5% of its workforce, with BMW this week reaching a deal with workers to start offering severance packages. The manufacturer also recently decided to pull out of the Paris car show as the company shifts its priorities. 

“The automotive industry is faced with rapidly escalating challenges,” chief executive officer Milan Nedeljkovic said. “That’s why it’s important to be lean and agile.”

Belt-tightening measures are also gaining speed in part thanks to more use of artificial intelligence in its development unit, Mertl added. 

Beyond China, the increased competition led by Chinese exports from the likes of BYD Co has also escalated across the Asia-Pacific region, dragging down car sales for the company globally. Even so, BMW is seeing growth in both Europe and the US, where deliveries expanded nearly 12% in the second quarter.  

BMW confirmed the 2026 outlook from last month’s warning that negatively surprised investors. The new prediction puts it on course to be the least profitable major European automaker.

The most pressing challenge remains China, BMW’s largest single market. The combination of mounting competition from local manufacturers such as smartphone maker Xiaomi Corp — especially on electric vehicles — and a property crisis is weighing on all carmakers there. In the second quarter, BMW’s car sales in China came in below the levels recorded in the Americas for the first time in a decade. 

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