BMW Ends Preference Share Era and Slashes Margin Forecast as China’s 30% Sales Slide Reshapes Strategy

BMW converts all preference shares to common stock amid severe earnings pressure, with margins forecast at 1-3% and China sales down 30% in Q2 2026.

BMW has completed a long-anticipated restructuring of its capital structure, converting all preference shares into common stock effective June 30, 2026 — a move that coincides with the deepest operational setback the automaker has faced in years. The share conversion, approved by a large majority at the May 13 shareholder meeting, removes a legacy class of equity just as the company’s core earnings power comes under its most severe pressure. The stock, which has shed nearly 40% since the start of 2026, now trades at €57.72, a whisker above its 52-week low of €57.06 and more than 41% below the December 2025 high of €97.90.

The urgency of the restructuring is amplified by the drastic margin outlook BMW published alongside its second-quarter sales report. Management now expects an operating margin of just 1% to 3% for the full year, a figure that underscores how deeply the combination of a Chinese demand rout and special charges related to the Middle East conflict is squeezing profitability. CEO Milan Nedeljkovi? has been forced to lower 2026 targets accordingly, even as the company attempts to reinvest in new models such as the upcoming iX3, which it expects to attract roughly 100,000 orders.

Global deliveries for the BMW, Mini, and Rolls-Royce brands fell 4.9% year-on-year in the second quarter to 590,962 vehicles. The core BMW brand fared worse, dropping 7.7% to 508,675 units, while Mini posted a 17% advance to 81,035 cars. The decisive factor was China, where sales collapsed 30% to 117,815 vehicles in the quarter. Over the first half, the Chinese market contracted 20.4%, making it the primary driver of BMW’s profit warning in late June. Gains elsewhere — Europe up 5.4%, the United States up 9.5% in the quarter and 13% specifically in the U.S. — were insufficient to offset the Chinese shortfall. In its home market of Germany, BMW registrations rose 18.6% in June alone, while India reported record first-half sales powered by electric vehicles and long-wheelbase models.

The China problem looks structural rather than cyclical. Beyond the immediate demand drop, BMW has begun scaling back external development contracts as part of a cost-cutting push from headquarters in Munich. The RSI currently stands at 29.3, a level that signals oversold conditions, while the stock trades nearly 16% below its 50-day moving average and roughly 30% below its 200-day average.

Despite the weak numbers, several analysts see value in the depressed valuation. JPMorgan reaffirmed its “Overweight” rating with a price target of €82 after an investor event, while RBC kept a “Sector Perform” stance with a target of €84 — both well above the current market price. The divergence between analyst confidence and the stock’s trajectory reflects the uncertainty around how deeply the margin compression will cut into cash flow.

The full half-year report, due at the end of July, will provide the first comprehensive look at whether BMW’s internal cost measures can shore up profitability before the new model cycle gains traction. For now, the combination of a capital structure cleanup and a brutal profit warning leaves investors with one clear message: the company is retrenching aggressively, and the outcome depends on whether the west can keep compensating for China’s decline.