BMW (BMWG.DE): End of the China dream?

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BMW (BMWG.DE): End of the China dream?

BMW (BMWG.DE)

13 July 2026 Citi Research

China sales, not offset by growth in US (11%) and Germany (13%). BMW has been most vocal about its expectations of a

"stabilisation" in its China business - which we see little evidence of - as China total market sales decline, and put more

pressure on ICE sales in particular, where EU OEMs dominate. The BMW NK models don't launch in China until Q4 26, but we

fear they may still not be (price) competitive enough in a very tough market environment. As China disappoints, BMW also

seems to be pivoting to US, which raises pricing risks in that market for premium OEMs. More importantly, we hope that this

China decline finally forces BMW to focus on its European profit pool and joins other EU OEMs in lobbying for more EU help.

Conclusion - lower still base EBIT margins — BMW shares have dropped sharply below the Automotive net cash position (of

~€70/share), even excluding the financial services equity (of ~€30/share). BMW continues to provide some support with the

continued share buy-back programme, but EPS downgrades and sustained risks about future (China) declines and

competitive headwinds continue to keep investors at bay. The new CEO will update detailed plans at the CMD in

September. As we have highlighted previously (here), apart from NK gains in an accelerating BEV market in Europe, we see few

other positive drivers for BMW RoS recovery. We believe that BMW has to: 1 - reduce China downside risk (by reducing its

internal China sales/earnings expectations to a low level); and 2 - stabilise Auto RoS by more than offsetting China declines

with improved RoW performance and cost reductions. We expect investors will await the CMD narrative. Neutral. We reduce