Profit margin plummets to 2.3%! BBA is selling cars on the brink of losses.

For a long time, Mercedes-Benz, BMW, and Audi have held the high ground of profitability in the global automotive industry through brand premium and scale advantages. However, after the release of their first-half 2026 financial reports, the core automotive businesses of these three companies are now on the brink of losses.

Looking at the overall operating data, all three companies saw revenue and profit decline in tandem, with various indicators hitting multi-year lows. Mercedes-Benz recorded first-half revenue of €63.66 billion, down 4.1% year-on-year; BMW posted revenue of €62.27 billion, a drop of 8%; Audi generated €29.18 billion in revenue, down 10.4% year-on-year.

Pressure on the profit side is even more pronounced. Mercedes-Benz and BMW saw EBIT decline by 3.1% and 37.4% year-on-year respectively. Only Audi achieved modest profit growth through strict cost control, but its operating margin was just 3.8%, also at a multi-year low.

Breaking down the core passenger car business, the crisis becomes even more apparent. Mercedes-Benz's passenger car EBIT shrank significantly by 66.2% in the first half, with the second quarter reaching just €50 million. The sales margin fell to 4%, a six-year low, a stark contrast to the 13.7% level seen in 2021.

BMW's situation is even more severe. The vehicle business achieved a profit margin of only 3.6% in the first half, plunging to 2.3% in the second quarter. Its profit scale even fell short of the financial services segment, and minor cost or price fluctuations could wipe out all earnings. In 2023, all three automakers maintained vehicle business margins above 10%. In just three short years, their profit space has been nearly halved.

The global market shows a sharp divergence. Sales in Europe and the US were stable with slight growth, but the Chinese market suffered a major slump. In the first half, Mercedes-Benz, BMW, and Audi each sold fewer than 300,000 units in China, with declines ranging from 19.3% to 28.3%. Mercedes-Benz's China sales fell 28%, yet its global sales still achieved growth when excluding the Chinese market.

Weakening domestic consumer confidence, shrinking fuel vehicle demand, mainstay model refreshes, and the rise of local premium new-energy brands have continuously squeezed the traditional luxury segment priced between 300,000 and 500,000 yuan. Consumers' car-buying criteria have shifted from brand orientation to intelligence and electric technology orientation, further compressing BBA's living space.

Facing the profit crisis, the three automakers have simultaneously launched cost-cutting measures, advancing global workforce optimization, reducing non-essential capital expenditures, and trimming idle capacity. At the same time, the brands have proposed a “sacrifice volume to protect prices” strategy, resisting terminal price wars and relying on high-end models to stabilize profits.

However, industry insiders are not optimistic about this strategy. BBA's massive factory and channel costs require sales volume for amortization, and reducing discounts would only further lower capacity utilization. Furthermore, each company faces distinct challenges: Mercedes-Benz's profits are highly dependent on fuel-powered models. BMW's new pure-electric platform models have not yet entered the Chinese market. Audi's dual joint venture and dual brand layout adds to internal management friction.All three automakers have lowered their full-year profit forecasts. BMW's vehicle business profit margin target is only 1%-3%. Should domestic competition intensify, single-quarter losses are highly likely.

The old profit model built on fuel vehicle dividends and the scale of the Chinese market has become invalid. Short-term cost reduction can only postpone the crisis. Only by launching competitive electrified products suited to the domestic market and completing a deep localization transformation can BBA emerge from its current profitability predicament.