BMW Group is accelerating cost-cutting and restructuring its workforce after a difficult first half of 2026, with earnings before tax falling 29.4 per cent year-on-year to €4,045 million. The primary culprit is a sharp deterioration in China, the company’s largest single market, where deliveries dropped 20.4 per cent in the first six months and 30.2 per cent in the second quarter alone.
Restructuring and Workforce Changes
The company has reached an agreement with its Works Council on a voluntary severance programme as part of a broader effort to reduce complexity and lower its cost base. Board Chairman Milan Nedeljković described the operating environment as one shaped by intense global competition, tightening regional regulations, and ongoing geopolitical instability.
Research and development spending fell 7.6 per cent to €3,714 million in the first half, while capital expenditure dropped 30.5 per cent to €1,900 million. Sales and administrative costs also declined by 6.1 per cent. These reductions are described as planned rather than reactive, part of a longer-term efficiency drive that saved €2.5 billion last year.
China Drag, European and US Bright Spots
The headline delivery figures tell a mixed story. Total group deliveries for the first half reached 1,156,727 vehicles across BMW, MINI, and Rolls-Royce, down 4.2 per cent on the same period in 2025. However, Europe grew 5.4 per cent and the United States grew 3.9 per cent, with both regions accelerating further in the second quarter.
China delivered just 261,773 units in the first half, a loss of more than 67,000 vehicles compared with the prior year. That scale of decline is difficult to offset elsewhere, and it flows directly into the automotive segment’s EBIT margin, which fell to 3.6 per cent for the half and just 2.3 per cent in the second quarter. Import duty headwinds accounted for roughly 1.25 percentage points of that margin compression.
MINI and Electric Vehicles Offer Encouragement
MINI was a genuine bright spot. The brand delivered 149,535 vehicles in the first half, up 11.7 per cent, with fully electric models accounting for 36.9 per cent of total MINI sales. That means more than one in three MINIs sold globally was battery-electric, a meaningful shift for a brand that has committed heavily to electrification.
Across the wider group, BMW delivered 204,295 fully electric vehicles in the first half, though that figure was down 7.4 per cent year-on-year. In Europe, however, BEV sales surged 37.9 per cent in the second quarter following the launch of the BMW iX3 in March. Nearly one in three vehicles delivered in Europe during that period was fully electric.
Neue Klasse Momentum
BMW is pinning considerable hope on its Neue Klasse platform. The iX3, the first model built on the new architecture, is approaching 100,000 orders since its sales launch. The BMW i3 (the second Neue Klasse model) opened its early ordering phase in June and has reportedly attracted strong initial demand.
The company also confirmed that the new BMW X5 will offer five drivetrain variants, incorporating Neue Klasse technologies while catering to different market requirements globally. Finance board member Walter Mertl noted that artificial intelligence and digitalisation are already shortening virtual vehicle validation cycles within the development division.
Outlook
BMW confirmed its full-year 2026 guidance, projecting free cash flow above €2.5 billion for the automotive segment. The Financial Services division offered some stability, with new financing and leasing contracts rising 5.0 per cent and second-quarter profit before tax climbing 15.7 per cent.
The broader picture is of a company managing a genuine structural challenge in China while betting on European EV momentum and the Neue Klasse to restore margins. Whether that bet pays off depends heavily on how quickly the Chinese market stabilises, something BMW cannot control from Munich.
