Bernstein reduced its price target for BMW (ETR: BMWG) to €85 from €108 while keeping an Outperform rating, citing a weaker outlook for China, lower earnings expectations and reduced profitability forecasts. BMW itself lowered its 2026 guidance earlier this month, trimming the expected automotive EBIT margin to a range of 1%‑3% from the prior 4%‑6% and cutting the automotive free cash flow forecast to just over €2.5 billion from more than €4.5 billion. The analysts attribute roughly two‑thirds of the guidance reduction to deteriorating market conditions in China and other Asia‑Pacific markets, with the remaining impact coming from restructuring and cost‑optimization measures expected to be recorded in the second half of 2026. BMW now forecasts a 13% decline in Chinese sales for 2026, followed by a further 10% drop in 2027, which contributes to an overall 2.5% fall in global vehicle deliveries for 2026, compared with an earlier estimate of a 1.6% decline. The weaker demand outlook prompted an approximately 30% reduction in the 2026 group EBIT forecast. Automotive EBIT margins are projected to recover gradually, moving from 3.0% in 2026 to 4.0% in 2027 and 6.1% in 2028. The valuation discount applied to BMW was increased to 30% from 20% to reflect intensifying competition in China. Attention now turns to BMW’s capital markets day scheduled for late September, where investors will seek details on management’s plan to restore automotive margins to the long‑term target range of 8%‑10% and on future capital‑return strategies. Despite the lower near‑term forecasts, the report maintains a positive long‑term view, highlighting the Neue Klasse vehicle platform as a key growth driver. The next‑generation architecture is expected to generate meaningful cost savings and improved profitability as production ramps up under the leadership of new Chief Executive Milan Nedeljković.