EU car sector shaken by BMW’s profit warning; Stellantis slips in Milan

(Il Sole 24 Ore Radiocor) - The European automotive sector is coming under selling pressure following the profit warning issued by BMW . Also down in Frankfurt are Mercedes-Benz Group and Volkswagen are also down in Francoforte. In Paris, Renault is losing ground, whilst in Milan Stellantis is slipping. The share price stemmed its losses following the announcement of the group’s partnership with Wayve and Uber to jointly explore the development and global roll-out of Level 4 robotaxis, i.e. driverless vehicles.

The day before, however, after the markets had closed, German carmaker BMW issued a profit warning regarding its 2026 results, explaining that the Chinese market continues to show signs of weakness and that it recorded a further slowdown in the second quarter, particularly in the non-electric vehicle segment. The car manufacturer also emphasised that the crisis in the Middle East is having a negative impact on its business, with worse consequences than initially anticipated for both energy prices and global consumer confidence. Consequently, whilst stepping up its ongoing cost-cutting programme, the carmaker expects a negative impact on its 2026 results. In particular, the group now forecasts a slight decline in deliveries by the end of the year, whereas it had previously aimed for substantial stabilisation. Management has also warned that pre-tax profit will fall significantly, compared with the previous indication of a moderate decline. Free cash flow for the automotive segment is now expected to exceed 2.5 billion euros, rather than the 4.5 billion previously estimated.

The guidance provided by BMW’s top management is sending shockwaves through the entire automotive sector, as it paints a picture that goes beyond the specific challenges facing the German group and affects the sector as a whole. Investors are therefore beginning to factor in the possibility that, following BMW’s lead, other car manufacturers may also revise their forecasts for 2026 downwards. “For Stellantis, there are no direct implications linked to the slowdown in the Chinese market, given that the group has a limited presence in the country, accounting for around 1 per cent of its total volumes. However, concerns remain regarding the growing competitive pressure from Chinese brands, particularly in Europe, and the macroeconomic consequences of the crisis in the Middle East”, comment the analysts at Equita. Although the brokerage firm does not expect further revisions to cost estimates following the substantial provisions and ‘write-offs’ already recorded, it maintains a cautious stance: “Whilst we believe that, when the second-quarter results are announced on 30 July, the guidance for the full financial year will be confirmed, we cannot rule out pressure on consensus estimates and, above all, on our own, which are more optimistic.” The brokerage firm therefore confirms its ‘Hold’ rating on Stellantis, with a target price of €7.6. Banca Akros also believes that “the impact of BMW’s profit warning is only marginally negative for Stellantis, as the group generates only around 1 per cent of its sales in China and the Asia-Pacific region”. However, the analysts admit that “the negative effects of the crisis in the Middle East and the deterioration in consumer sentiment could continue to pose an obstacle to the recovery of Stellantis’s profitability”.

Banca Akros nevertheless maintains its ‘Buy’ recommendation on the share, with a target price of 9 euros. Experts warn, however, that the alarm raised by BMW could have negative effects on Brembo, for which they nevertheless maintain an “Accumulate” rating and a target price of 12 euros. The automotive components manufacturer counts BMW among its key customers, and it should also be noted that it has exposure to China, a region accounting for around 14 per cent of its turnover. Possible repercussions could also arise for Pirelli & C (the broker maintains its “Accumulate” rating, with a target price of 7 euros), given that around 17% of the group’s sales come from the Asia-Pacific region. As for Ferrari ("Neutral", target price of 320 euros), on the other hand, analysts do not foresee any significant impact, given that China accounts for around 7% of deliveries and the greater pricing flexibility afforded by the brand’s standing.