BMW is setting out a medium-term profitability plan for its core car business as it reshapes its model lineup and production footprint. The German automaker is aiming for a 3% to 5% margin in its auto division in 2028, with a longer-term goal of returning to an 8% to 10% range by the early next decade.
Highlights
- BMW targets a 3% to 5% auto division margin in 2028, aiming for 8% to 10% by the early next decade, up from 2.3%.
- BMW plans to reduce model offerings, increase localization, and focus on Neue Klasse, the electric iX3, and a new luxury SUV above the X7.
- The margin targets follow June's profit warning and an expected redundancy program impacting about 8,000 jobs in Germany due to Chinese competition and U.S. tariffs.
Margin targets and product strategy
As reported by Reuters, Bernstein analysts said in a note on Wednesday that BMW has set a margin target of 3% to 5% for its auto division in 2028 while planning to offer fewer models and increase localization.Bernstein wrote that BMW hopes to recover to an 8% to 10% margin range by the early next decade, a sharp improvement from its most recent result of 2.3%. Stephen Reitman of Bernstein said the company sees the answer as more than cost cutting and is also pursuing growth through innovative products, with the Neue Klasse lineup and the electric SUV iX3 central to that recovery.
At its capital markets day, BMW also confirmed plans to launch a luxury SUV positioned above the X7. The note said the carmaker is also putting more emphasis on its M brand and Alpina models from 2027 to broaden its premium portfolio.
Pressure on German auto makers
BMW is due to release further details of its strategy later on Wednesday, a spokesperson said.The targets come as Germany's large automakers face mounting pressure from Chinese competition and U.S. tariffs. BMW's standing for resilience was dented in June when it issued a profit warning, and the company soon after announced a redundancy program that is expected to affect about 8,000 jobs in Germany.
Our earlier article on the EU’s post-Brexit EV rules-of-origin debate explained how European battery-material producers are urging Brussels to keep stricter 2027 requirements in place to support investment in the region’s battery supply chain and reduce reliance on China. It also noted automakers’ concerns that many vehicles could fail the thresholds and face 10% tariffs in UK-EU trade, highlighting how policy-driven localization pressures are reshaping cost and production decisions across the sector.
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