BMW's Hard Reset: 7,500 Roles Cut, Margin Outlook Halved, But Dividends Left Untouched
Published on 06/18/2026 at 15:23 | Redaktion boerse-global.de
Milan Nedeljkovic has wasted no time making his mark as BMW's new chief executive. Barely a day after the Munich-based carmaker slashed its 2026 earnings forecast, the CEO unveiled a sweeping cost-cutting programme that puts up to 7,500 jobs on the line worldwide and subjects the company's entire capacity structure to a fundamental review. The twin blows have sent the stock careening to its lowest level in over five years.
The profit warning itself was brutal. BMW now expects its automotive EBIT margin to land between 1 and 3 percent this year, down from a previous target of 4 to 6 percent. The return on capital employed in the segment has been cut to a range of 1 to 5 percent, compared with the earlier 6 to 10 percent. Free cash flow in the auto division is forecast at more than €2.5 billion, roughly half of what had been anticipated. The group's pre-tax profit is set to decline sharply from 2025 levels, a far steeper drop than the moderate fall originally baked into guidance.
Management points to two principal culprits. China's auto market deteriorated further in the second quarter, especially for combustion-engine vehicles, and the competitive landscape across the Asia-Pacific region has intensified. Positive momentum in Europe and the US has failed to offset the shortfall. Separately, BMW says the Middle East conflict has driven up energy costs and sapped consumer confidence in several markets — an external shock the carmaker admits it previously underestimated.
Nedeljkovic's response is a dual-pronged attack on costs. The 7,500 job cuts — roughly 5 percent of the global workforce — will be achieved largely through natural attrition and early retirement, with compulsory redundancies largely ruled out. At the same time, the company is examining capacity reductions across its production network, though concrete measures have yet to be announced. Reuters reported that BMW is reviewing its capacity needs and that it is too early for further comment. The restructuring will incur one-time charges in the second half of 2026, with the savings expected to materialise only in subsequent years. In short, this year will get worse before it gets better.
Should investors sell immediately? Or is it worth buying BMW?
The market's immediate verdict was harsh. Shares tumbled 7 percent on Wednesday to their lowest since late 2020, and the selling continued into Thursday, with the stock touching €60.80 — barely above the 52-week low of €60.34 set a day earlier. Year to date, BMW has lost 36.6 percent of its value.
Analysts have rushed to recalibrate their models. Goldman Sachs cut its price target from €107 to €84 but maintained a buy rating. JPMorgan trimmed its forecast to €82, cautioning that the warning may be a sector-wide signal. Berenberg downgraded the shares to "hold" with a drastic target reduction to €69. Barclays now rates the stock "underweight" at €82.50.
Technically, the stock is deeply oversold. The relative strength index has plunged to 19, a level that traditionally flags a potential bounce. But with the company's operational problems far from resolved, the next key date for investors is July 30, 2026, when BMW publishes its half-year report. That is when management will have to flesh out the details of its China strategy and the new cost-savings plan.
BMW at a turning point? This analysis reveals what investors need to know now.
Investors should at least take some comfort in the dividend. BMW has left its payout ratio and share buyback programme unchanged, signalling that the board remains committed to shareholder returns even as it cuts deeper into the bone.
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BMW Stock: New Analysis - 18 June
Fresh BMW information released. What's the impact for investors? Our latest independent report examines recent figures and market trends.
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