BMW Q1 Profit Falls 25% as China Competition Intensifies

Affected by intensifying competition in China and uncertainty surrounding U.S. tariffs, BMW reported declines in both profit and vehicle sales in the first quarter.

BMW’s latest quarterly results showed revenue of €31.01 billion ($35.4 billion), down 8.1% year-on-year. Pre-tax profit fell 25% to €2.348 billion ($2.68 billion), while net profit attributable to shareholders declined 23.1% to €1.672 billion ($1.91 billion).

Pressure on profitability was concentrated mainly in the automotive business. BMW’s automotive EBIT fell 33.5% year-on-year to €1.345 billion ($1.54 billion), while the operating margin dropped from 6.9% a year earlier to 5.0%, placing it near the midpoint of the company’s full-year guidance range of 4%–6%.

Vehicle deliveries also weakened. BMW delivered 565,800 vehicles globally during the first quarter, down 3.5% year-on-year.

The Chinese market remained the weakest region, with deliveries falling 10% to 144,000 units.

The decline reflects the continued rise in new energy vehicle penetration in China, where domestic brands are increasingly pressuring traditional luxury automakers through advantages in intelligent driving features, pricing, and faster product refresh cycles.

Beginning in January, BMW China adjusted the suggested retail prices of 31 key models, with 24 models seeing price reductions of more than 10%.

While the pricing cuts helped stabilize sales volumes, they also directly compressed profit margins.

Pressure is also intensifying across the dealer network. Data shows BMW’s dealer count in China has declined from 655 stores to 571, including a net reduction of 26 dealerships in the first quarter alone.

At the same time, some traditional 4S dealerships are transitioning into smaller 2S outlets or lightweight service centers in an effort to reduce operating costs.

Last year, BMW lowered its full-year free cash flow target from “above €5 billion ($5.71 billion)” to “above €2.5 billion ($2.85 billion).”

Part of the revision was linked to continued financial support provided to its Chinese dealer network to ease channel pressure.

Looking back at 2025, BMW delivered 625,500 vehicles in China, accounting for roughly one-quarter of its global sales, underscoring China’s position as BMW’s largest single market worldwide.

At the same time, BMW continues accelerating its next-generation EV and software strategy in China, including development of the Neue Klasse platform, electric drive technologies, localized AI ecosystems, and its advanced driving collaboration with Momenta.

Under current plans, the long-wheelbase Neue Klasse iX3 is scheduled to launch in the fourth quarter of 2026, while the locally produced long-wheelbase Neue Klasse i3 is expected to arrive in 2027.

For BMW, China has become both its most significant source of profit pressure and the market where it can least afford to lose ground in the transition toward next-generation mobility.