Like its peers, BMW is facing the rise of Asian brands, higher industrial costs, and weak demand, hurt by customers' falling purchasing power. Last year, revenues and margins already fell sharply, and the outlook for the coming years offers little hope for optimism. The greater-than-expected impact of customs duties, combined with the postponement - until 2026 - of the reimbursement of amounts that the group was due to recover this year, further clouds the picture. BMW now forecasts an operating margin (EBIT) of between 5% and 6%, down from 5% to 7% previously, with free cash flow of over €2.5bn, down from over €5bn previously.
The German group has high hopes for the Neue Klasse, its future 100% electric platform that will serve as the basis for all its new models from 2026. This project will enable the brand to start from scratch, as for years it had been content to adapt platforms designed for combustion engines. According to management, this new architecture promises up to a 50% reduction in costs, 30% more range, and shorter charging times. The ultimate goal is to restore margins and strengthen the group's competitiveness against Tesla and Chinese brands.
However, the electric vehicle market itself remains fragile. Tesla is the best example of this. Its catalog is aging, which explains the decision to release cheaper versions of the Model Y and 3. In the US, the end of federal subsidies is also weighing on demand. More broadly, manufacturers are suffering from fierce Chinese competition, which is affecting volumes and margins.
However, analysts urge caution in interpreting the warning: the expected decline in free cash flow is mainly due to a calendar effect, as customs duty refunds are only being deferred until next year. Cash flow would therefore automatically build up in 2026. Furthermore, BMW continues to have a solid balance sheet.
This explains why investors continue to value the stock at levels close to its historical average, with a dividend yield of between 4.9% and 6%. The reorganization of its sales network is an asset in stabilizing prices. However, visibility is currently low for all European manufacturers. The market remains in great distress.
