Luxury and automotive sectors face slowdown in China and global markets

Major luxury and automotive brands are reporting significant declines in performance, driven largely by weakening demand in the Chinese market and shifting consumer behavior.

BMW Group has lowered its 2026 full-year EBIT margin forecast for its automotive business to between -0.5% and 0.5%, a sharp reduction from previous guidance. This downward revision follows a period of declining sales in China, where BMW's sales fell 12.5% in 2025 and continued to drop throughout 2026. The company cited additional costs from accelerated layoffs and market pressure in China as primary factors.

In the luxury sector, Hermès reported its slowest quarterly growth since early 2020, with revenue growth in the Asia-Pacific region (excluding Japan) stalling at 0% in constant currency terms. This trend is mirrored across the industry: Kering saw a significant single-day stock drop following disappointing revenue reports, while LVMH and Prada also faced slowing growth in Asian markets. Analysts suggest that the perceived resilience of luxury brands is being tested as high-end consumers pull back and the market faces increased competition from lower-priced alternatives.