New Delhi: The note from the reports indicates that BMW has established a margin target of 3% to 5% for its auto division next year, which involves offering fewer models and higher localization.
The target is the initial step in a more extensive recovery plan. BMW’s margin is expected to be 8%-10% by the early 2030s, which is a significant recovery from the last margin of 2.3%.
The plan was presented by Bernstein prior to a capital markets day, on which BMW is scheduled to present its strategy to investors. The auto company is to the point where it understands it can’t solve any of its problems with cost reductions alone, but wants to go down new roads for growth with new products, said Stephen Reitman, an analyst at Menlo Park-based JMP Securities. The Neue Klasse lineup, spearheaded by the electric iX3 SUV, was among the main elements in the turnaround, he said.
The product range continues to expand upwards. BMW’s announcement of a new luxury SUV that sits above the X7 is also in the works, and the company will be introducing more 2027 M and Alpina vehicles to help boost prices and profits. BMW also revealed separately that it would be spending approximately €2 billion ($2.3 billion) building the next-generation 3 Series sedan in Germany.
China is still the weak link. According to Bernstein, BMW’s European and US plants are fully utilized, and China is the main area needing production adjustments and flexibility.
The selling pressure on BMW has been mounting for months. Chosen German suppliers are being undercut by the competition from China and by tariffs from the United States, and BMW’s image of stability suffered a blow on June of this year with a surprise profit warning. A redundancy programme was then promised, which Germany was to lose around 8,000 jobs. BMW shares have dropped more than a third in the last year to their lowest point in over six years.
Some don’t think the goal is ambitious enough. UBS feels that the 2028 margin consensus of 3.7% is in jeopardy, with its 2028 expectation of below the consensus, at 5.1%. It also has the automotive margin below 2% in the 2nd half of 2026.
The 2028 period will be a real yardstick for investors to see if the fewer models, shared electric platform and higher percentage of local production combine to reinvigorate profits for Europe’s established automotive manufacturers as they see cheaper competition from foreign market entrants and the entry of new rules into foreign markets.
