BMW Slashes Margin Outlook as 8,000 Job Cuts Bite Into Profits

BMW has issued its second profit warning in a year, guiding to an automotive margin of between -0.5% and 0.5% for 2025 as it absorbs the cost of a restructuring programme that includes 8,000 job cuts in Germany.

The downgrade is steep. At the beginning of the year, BMW still considered a margin of 4-6% possible. The company blamed fourth-quarter costs tied to the restructuring and continuing competitive pressure from China.

The numbers behind the warning landed on Wednesday. BMW reported an 11% drop in third-quarter pre-tax earnings, to €2.1bn (£1.75bn). Revenue fell 6% to €30.4bn, dragged down by declining sales in China.

The company signalled potential losses for the full year. Without the restructuring charges, the margin would sit above 2%, within its previous forecast range, BMW said.

Why is BMW cutting jobs now?

BMW is the latest German carmaker to downgrade its outlook under pressure from lower-cost domestic rivals in China. Western automakers have struggled to keep pace there, which has cut their local sales and triggered a rise in Chinese exports to Europe.

Sales in China fell 22% in the first nine months of the year. BMW said the decline tracked the broader downturn in that market rather than any company-specific failure.

The restructuring has two costly components. Because of the rapid launch of its new generation of electric vehicles, BMW is writing off parts of its previous vehicle and technology generations. It is also pricing in the costs of the redundancy programme.

Chief executive Milan Nedeljković framed the moves as a response to a shifting industry.

"Current developments in our industry call for decisiveness and swift implementation. We will therefore specifically intensify and accelerate structural measures," Nedeljković said.

He added that management functions would be cut more quickly under the restructuring drive.

How did the core business perform?

The operating margin in BMW's core automotive division narrowed to 3.4%, beating analysts' forecast of 3.1% but down sharply from 5.2% a year earlier.

That beat offers little comfort against the full-year picture. The gap between a 3.4% quarterly margin and a possible negative full-year result reflects the weight of charges still to come in the fourth quarter.

What comes next for BMW in China?

China "remains a key focus", Nedeljković said. The group's Neue Klasse revival of its model offering begins in China this month with the launch of the iX3 electric SUV.

BMW follows Volkswagen in taking painful restructuring costs caused by the rapidly changing market. The pattern extends across the German sector: Mercedes-Benz cut its profit outlook last week and also reported lower third-quarter profits. Porsche rebounded slightly, but only after steep charges last year as it overhauls its model lineup and retreats from China.

For BMW, the fourth quarter will show whether the accelerated restructuring restores margins or whether Chinese competition keeps compressing the business faster than cost cuts can offset it.