BMW’s Capital Overhaul and CEO Transition Unfold as Tariffs and China Weigh on Earnings

Milan Nedeljkovi? takes over as BMW's Q1 net profit drops 23%, tariffs pressure margins, and EV orders hit 50,000; stock near 52-week low despite dividend increase and share simplification.

A trio of strategic events converged at BMW this week: a new chief executive took the helm, the company simplified its share structure, and shareholders received a slightly higher dividend. Yet the stock, which closed at €74.78 on Friday, continued to languish near its 52-week low, having shed 22.04% since the start of the year. The disconnect between corporate housekeeping and market sentiment is stark.

Milan Nedeljkovi?, a 32-year company veteran who rose through the ranks from trainee to head of global production, assumed the CEO role on 14 May, replacing Oliver Zipse. His immediate challenge is proving that BMW’s expensive push into electric vehicles can generate sustainable profits. The centrepiece of that effort is the “Neue Klasse” platform, whose first model, the iX3, began European deliveries in March. Demand is building: BMW has already collected around 50,000 orders for the SUV and has switched its Debrecen plant in Hungary to double shifts. The US and Chinese launches are scheduled for the summer, with production of the i3 at BMW’s Munich headquarters slated for the second half of the year.

That order book, however, sits against a deteriorating financial picture. Group revenues fell 8% in the first quarter, the ninth consecutive decline, while net profit dropped by about 23%. The EBIT margin in the automotive division landed at 5.0%, the low end of the company’s target corridor, and management now expects the full-year margin to come in between 4% and 6%. Tariffs alone have carved more than a percentage point off operating profitability, and BMW has chosen not to pass the cost on to customers, protecting market share at the expense of earnings. China, BMW’s single largest market, saw deliveries shrink by 10% during the period, and the US tariff burden has added further pressure.

The stock’s technical position reflects the gloom. It sits 6.68% below its 50-day moving average and 12.99% below the 200-day line. The relative strength index of 47.9 suggests the sell-off has not yet reached oversold territory. That leaves little cushion for the new CEO as he tries to guide the company toward a medium-term automotive margin target of 8% to 10%, to be achieved by the time BMW launches dozens of new or updated models by the end of 2027.

Alongside the leadership change, shareholders approved the conversion of preference shares into ordinary voting stock at the annual general meeting, eliminating the dual-class structure. The move is designed to improve liquidity, simplify trading for international investors and potentially alter BMW’s weighting in major indices. The dividend of €4.40 per share, up from €4.30 a year earlier, was credited to accounts on Tuesday, a pay-out that drew criticism from environmental groups who argue the company should conserve cash for its EV and fuel-cell investments rather than reward holders while earnings slide.

Nedeljkovi? has until 2031 under his contract to translate the electric-vehicle overhaul into measurable profit gains. For now, the market is watching whether he can stabilise margins while the tariff and China headwinds show no sign of easing. The dividend payment may provide a brief technical floor, but the real test is still ahead.