BMW reported a sharp drop in second-quarter earnings on Thursday, driven by collapsing demand in China. Net profit fell 35% to €1.2 billion, the lowest since late 2024, while operating profit in the core automotive division tumbled more than 60% to €629 million – a level where the company made more money from its financial services than from building cars. Revenue slipped 7.9% to €31.3 billion, and the automotive margin sank to 2.3%.

The slide is largely attributed to a 30% plunge in vehicle deliveries in China, where a sluggish economy and fierce competition from local manufacturers such as BYD have eroded sales. BMW’s China sales fell 20% in the first half and by over 30% in the second quarter alone. The region, once a profit engine, has become a drag across the German industry: Mercedes-Benz posted a €1.09 billion quarterly net profit, while Volkswagen earned €1.54 billion but is weighing far deeper cuts.

New CEO Milan Nedeljkovic, who took office in mid-May, is responding with a downsizing plan. The company will offer voluntary redundancy to roughly 40,000 desk-based employees in Germany from October, aiming to eliminate about 8,000 jobs by the end of 2027. Production-line workers are excluded. The programme is expected to generate annual savings of €1 billion from 2028, with costs this year in the hundreds of millions. BMW confirmed its revised guidance for the year, forecasting a significant drop in pre-tax profit and an automotive margin between 1% and 3%.

The next milestone is the start of the voluntary redundancy programme in October, as BMW seeks to cut costs amid a deepening structural shift in the global auto market, where Chinese rivals are gaining share with faster development cycles and cheaper electric models.