BMW Navigates a Week of Structural Overhaul and Margin Squeeze as New CEO Takes the Wheel

BMW Q1 EBIT margin at 5%, new CEO Nedeljkovi? takes over, share structure simplified, Neue Klasse iX3 pre-orders top 50k. Stock down 22% YTD.

The Bavarian automaker is closing out one of its most consequential weeks in years, with a leadership transition, a sweeping overhaul of its share structure, and quarterly earnings that underscore the pressure on profitability. Milan Nedeljkovi? has taken the reins from Oliver Zipse after nearly seven years at the helm, assuming command just as the company’s operating margin in its core automotive business has been squeezed to precisely 5%.

That figure sits dead in the middle of the group’s full-year target range of 4% to 6% — a band that itself reflects the structural headwinds now buffeting the industry. First-quarter revenue slid just over 8% to €31 billion, with weak demand in China and unfavorable currency movements taking their toll. The automotive segment generated operating profit of roughly €1.3 billion, translating into that 5% EBIT margin. After taxes, net profit fell to approximately €1.7 billion. Tariffs alone are shaving more than one percentage point off profitability, the company has said, though management has held its annual guidance steady.

Alongside the CEO handover, BMW has scrapped its long-standing two-tier share structure. From now on, only one class of voting common shares exists, replacing the former preference shares. The move, which finance chief Walter Mertl said should boost BMW’s weighting in key equity indices, took effect alongside a slightly higher dividend payout. Shareholders will receive €4.40 per share on May 19, with the stock already trading ex-dividend.

The hope for a recovery rests heavily on the Neue Klasse platform. The fully electric iX3, the first model off the new architecture, has already racked up more than 50,000 pre-orders in Europe — well above initial projections. To keep up, BMW’s plant in Debrecen, Hungary, added a second shift in February. The company also confirmed that the next-generation X5, built in Spartanburg, South Carolina, will launch production in August, with five powertrain options including an electric iX5, plug-in hybrids, and a hydrogen variant. High-voltage batteries for the new models will come from a newly assembled plant in Woodruff.

Off the production line, the company’s motorsport division is celebrating the 40th anniversary of the M3 this weekend at the Nürburgring 24-hour race. BMW is aiming for its 22nd overall victory and has entered a racing version of the M3 Touring — a car that began as an April Fools’ joke last year. The track success, however, stands in stark contrast to the stock’s performance.

The shares ended the week at €74.78, leaving them nearly 22% lower since January and roughly 7% below their 50-day moving average. Nedeljkovi? now faces the dual challenge of stabilizing margins and proving that the Neue Klasse platform can deliver the promised scale effects in time to lift earnings. Investor confidence will depend on whether those operational gains materialise quickly enough to reverse the slide.