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UBS expects BMW to set a 2028 automotive EBIT margin target of 3% to 5%, below the current 5.1% market consensus, as the German automaker adopts more cautious medium-term goals following three profit warnings tied to weakness in China.
BMW is scheduled to hold its capital markets day on Sept. 29-30, with updated financial targets expected on Sept. 30. UBS believes BMW will retain its longer-term automotive EBIT margin ambition of 8% to 10%, but could push the timeframe beyond 2030.
The bank said a potential 20% to 25% reduction in 2028 automotive EBIT expectations would be significant for investors. UBS also considers the 2027 consensus margin forecast of 3.7% too optimistic and sees potential for margins to fall toward 2% to 3%.
Most financial headwinds are expected in 2027, while cost-saving measures should gradually provide support over the following two years. UBS estimates BMW's automotive EBIT margin run rate could fall below 2% in the second half of 2026.
Starting from an adjusted 2026 margin run rate of 2.5%, UBS estimates that commodity costs, depreciation and amortization, and foreign-exchange pressures could create about €1.3 billion in headwinds, mainly during 2027. Around €700 million of relief could emerge in 2028 as purchase price allocation related to BMW's China joint venture phases out.
Assuming vehicle volumes, pricing and product mix remain broadly unchanged between 2026 and 2028, BMW may need roughly €2.3 billion in cost reductions to reach UBS's forecast. The company's previously announced 8,000 overhead job cuts are expected to generate around €1 billion in annual savings.
UBS expects global BMW vehicle volumes to remain broadly flat through 2028 and sees limited room for stronger shareholder returns. Restructuring cash outflows exceeding €1 billion across 2027 and 2028 could also pressure free cash flow.
UBS does not anticipate a major strategic overhaul at BMW's capital markets day, noting that Neue Klasse has shown encouraging early progress. The bank maintains a "neutral" rating on BMW shares with a €70 12-month price target.
