Bayerische Motoren Werke Aktiengesellschaft (ETR:BMW) opened its 2026 fiscal year with what CFO Walter Mertl described as “sound financial results… in line with our expectations,” even as the automaker faced headwinds from tariffs, foreign exchange movements, and softer demand for battery-electric vehicles (BEVs) in the U.S. and China.
First-quarter financial performance
Mertl reported group revenues of EUR 31 billion for the first quarter and earnings before tax of EUR 2.35 billion, which he said was “approximately 25% lower than in Q1 2025.” The BMW Group generated a group EBIT margin of 7.6%, which he noted was in line with the full-year levels achieved in 2025 and 2024.
Deliveries and regional trends
BMW Group delivered about 566,000 BMW, MINI, and Rolls-Royce vehicles in the quarter, down 3.5% year over year. Mertl attributed the decline to weaker BEV sales in the U.S. and China. The BMW brand was down 4.6%, while MINI continued to grow following its model portfolio renewal, with deliveries up 6%.
BMW also adjusted how it reports regions to reflect its sales organization structure. Performance highlights included:
- Europe: Deliveries rose 3%, with growth across combustion engines, BEVs, and plug-in hybrids. Mertl said the BMW brand’s European order intake “showed strong growth across the entire product portfolio,” with an order bank “reaching well into the second half of the year.”
- Asia Pacific, Eastern Europe, Middle East, and Africa: Deliveries fell by about 6,700 units or 8.3%, influenced by macroeconomic conditions and competitive dynamics. Mertl said the Middle East conflict had a limited impact on regional sales in Q1.
- Americas: Retail sales declined 4% year over year, “primarily due to the U.S.” Mertl said U.S. BEV sales “dropped significantly” after IRA support was discontinued in Q4 2025, though BMW’s combustion-engine lineup helped offset demand shifts.
- China: The overall market declined “sharply by over 17%,” while BMW Group sales decreased 10%, which Mertl said outperformed the broader market.
Electrification, competition, and cost actions
BMW delivered more than 87,000 BEVs globally in the first three months, with total electrified sales (BEVs plus plug-in hybrids) of about 133,000. That translated into a 15.5% BEV share and a 23.4% electrified share of total sales. In Europe, Mertl said BEV order intake increased by more than 60% year over year, driven “especially” by demand for the BMW iX3 and BMW iX1. He added that incentive and subsidy changes in China and the U.S. weighed on BEV sales in those markets.
Automotive segment revenue declined 7% to EUR 27.2 billion; adjusted for currency translation, the decline was 2.9%. Mertl pointed to lower volumes and “intense global competition.” He said currency and raw-material positions created a negative impact of about EUR 400 million, while the net effect of volume, model mix, and pricing was about EUR 700 million worse than Q1 2025, reflecting lower volumes and competitive pressure.
Management highlighted cost reduction efforts, including lower investment spending. Mertl said group R&D expenditure totaled around EUR 1.8 billion, down about 12% year over year, aided by “early investments in the Neue Klasse.” Selling and administrative expenses also declined by around EUR 100 million.
Cash flow, shareholder returns, and segment updates
Automotive free cash flow was about EUR 800 million in Q1. Mertl said working capital changes reduced free cash flow by around EUR 500 million, reflecting typical first-quarter inventory buildup as production exceeded sales. He added that depreciation exceeded capital expenditure in the quarter, providing about EUR 600 million of support to free cash flow; BMW expects that dynamic to continue through 2026 as CapEx is reduced and depreciation from earlier investments flows through. The company reiterated its full-year target of automotive free cash flow above EUR 4.5 billion.
BMW also reiterated its shareholder return approach. Mertl said the second tranche of the company’s third share buyback program—EUR 625 million—is underway and scheduled to be completed by the end of August at the latest, with a third tranche planned afterward.
In Financial Services, new retail contracts increased 4.3% to 420,000, and the lease/loan penetration rate rose to 51.6%. However, segment earnings were EUR 381 million, down EUR 269 million year over year. Mertl attributed the decline to an added risk provision in the U.K. after the Financial Conduct Authority issued its “final cross-sector compensation program” related to certain commission models used since 2007, which he said will likely lift compensation payments above previous estimates. He also cited lower income from end-of-lease vehicle resales, while noting the credit loss ratio remained low at 0.27%.
Motorcycle deliveries fell 4.2%, but segment EBIT rose to EUR 89 million with an 11.4% margin. Mertl said “other entities” results improved by around EUR 300 million on positive valuation effects from interest rate derivatives tied to a March rise in long-term interest rates.
Neue Klasse rollout and 2026 outlook
CEO Oliver Zipse opened with remarks on the death of longtime BMW works driver and brand ambassador Alessandro Zanardi, calling him “an impressive personality” and “an inspiration to many people worldwide.”
Zipse said BMW is focused on minimizing 2026 headwinds while staying on course with its long-term strategy, highlighting “technological neutrality,” the company’s global footprint, and its brands and products. He pointed to the Neue Klasse as a major technology leap and detailed product and production developments tied to the platform.
Zipse said the launch of the BMW iX3, the first Neue Klasse vehicle, has been “extremely successful,” with first customer handovers in Europe in March and European pre-orders exceeding 50,000 units. He also said the model won two World Car Awards: 2026 World Car of the Year and 2026 World Electric Vehicle of the Year. BMW pulled forward a second production shift for the iX3 at Dingolfing in February and plans further rollout in the U.S. and Asia in coming months.
Zipse also discussed the world premiere of the new BMW i3 and said BMW will invest about EUR 650 million at its Munich plant. He said series production begins in August, followed by a European market launch “a few weeks later,” and that starting in 2027 the Munich plant will produce only electric vehicles. Zipse added that by the time the i3 is in customer production, BMW expects to have reduced overall production costs at the Munich plant by an additional 10%.
In China, Zipse said Neue Klasse vehicles tailored for the market have been developed with local R&D teams and partners, enabling integration of local digital ecosystems, including voice assistant features and automated driving solutions. He also noted that in 2027 the 7 millionth BMW vehicle will roll off the lines at BMW’s Shenyang production base.
On guidance, Mertl said BMW’s assumptions include continued uncertainty in the Middle East and expected tariff developments, including an assumption that EU-to-U.S. import duties remain at current levels and that tariffs on U.S. imports into the EU drop to 0% in the second half following a European Parliament vote. BMW continues to estimate a full-year negative tariff impact of about 1.25 percentage points on the automotive EBIT margin. The company left its full-year guidance unchanged, including:
- Group earnings before tax: “moderately lower” than 2025
- Automotive deliveries: expected to be at last year’s level
- Automotive EBIT margin: 4% to 6%
- Motorcycle EBIT margin: 4% to 6%
- Financial Services ROE: 13% to 16%
Zipse said the quarter was his final earnings call as CEO and thanked media and capital market participants, adding that his successor will be Milan Nedeljković.
About Bayerische Motoren Werke Aktiengesellschaft (ETR:BMW)
Bayerische Motoren Werke Aktiengesellschaft, together with its subsidiaries, engages in the development, manufacture, and sale of automobiles and motorcycles, and spare parts and accessories worldwide. It operates through Automotive, Motorcycles, and Financial Services segments. The Automotive segment engages in the development, manufacture, assembling, and sale of automobiles, spare parts, accessories, and mobility services under the BMW, MINI, and Rolls-Royce brands. The Motorcycles segment develops, manufactures, assembles, and sells motorcycles and scooters under the BMW Motorrad brand, as well as spare parts and accessories.
