European auto industry under pressure - BMW at its lowest since 2020

Shares of European carmakers came under pressure on Wednesday after BMW sharply lowered its financial forecasts for 2026.

The German group’s warning hit not only BMW’s own share price, but also sparked concerns about other companies in the segment - above all Mercedes-Benz and Volkswagen.

BMW is down more than 6%, Mercedes is down more than 3%, and Volkswagen is down more than 1%.

The sell-off shows that investors are treating BMW’s problems not as company-specific risk, but as a warning signal for the entire automotive sector.

• BMW significantly cut its 2026 EBIT margin forecast in the Automotive segment to 1–3% from the previous 4–6%. The company also said that the group’s gross profit will fall by more than 15%. Previously, both BMW and the market had expected only a moderate deterioration in results.
  • The main reason for the downgrade is said to be a deepening slowdown in China, especially in the internal combustion engine (ICE) car segment.
  • An additional source of pressure remains the war in Iran, which the company says has significantly raised energy costs and worsened global consumer sentiment more than previously assumed.

Barclays analysts pointed out that Mercedes may feel the negative comparative effect particularly strongly. This is due to similar exposure to China and sensitivity to a global deterioration in demand in the premium car segment. However, Mercedes has not yet updated its own forecasts.

This is already BMW’s third profit revision linked to China over the past two years, which undermines its previous image as a stable company. It also raises questions about the continued presence of European companies in the Chinese market and their ability to compete with local counterparts supported by the government.

The market is increasingly pricing in a scenario in which pressure from Chinese competition, weakening demand for ICE cars, and rising geopolitical burdens will be a structural problem rather than a temporary one.

BMW.DE (D1)

The company’s chart looks fairly bleak. From the local peak at the beginning of the year, valuations have fallen by more than 30%. The “death cross” in April pushed the share price to its lowest level since late 2020. However, it is worth noting that RSI levels have already reached extreme territory (24.6), which supports the scenario of at least a temporary rebound. Source: xStation5