BMW (BMWKY) shares fell Wednesday after the German automaker issued a sharp profit warning, with weaker demand in China now weighing heavily on its outlook. The company’s reduced targets suggest BMW could potentially end up as the least profitable major European automaker this year, based on the low end of guidance figures cited in the source.
China is now the biggest pressure point. BMW had projected stable sales in the country as recently as March, but now says business there is down about 18% through May. Analysts at Oxcap Analytics suggested the China slowdown could also pressure Mercedes-Benz (MBGAF), while weaker global consumer sentiment tied to the Middle East war may weigh on mass-market automakers such as Renault (RNSDF) and Stellantis 
STLA.
The warning could mark another sign that Germany’s premium automakers may need to rethink their old China-driven playbook. BMW, Mercedes, Volkswagen (VWAGY), and Porsche all face different levels of exposure, but the broader issue is similar: selling high-margin combustion-engine cars in China, mostly designed and built in Germany, may no longer carry the same economics. With CEO Milan Nedeljkovic planning a capital markets day in late September, Jefferies analyst Philippe Houchois suggested BMW could be preparing more sourcing and integration work in North America and China.
