BMW Targets 3%-5% Auto Margin by 2028 in Recovery Plan

BMW is targeting an automotive margin of 3% to 5% by 2028 as the German luxury carmaker pushes ahead with a recovery strategy following a June profit warning driven by weakness in China.

BMW shares rose 1.7% in early trading. The Munich-based automaker ultimately aims to restore margins to between 8% and 10% by the early 2030s, compared with its latest margin of 2.3%. For 2026, BMW had previously set a target of 1% to 3%.

The June profit warning marked BMW’s third in just over three years and prompted the company to accelerate cost-cutting measures. Its restructuring includes a redundancy program expected to affect about 8,000 jobs in Germany, following similar cost reductions at Volkswagen and Mercedes-Benz. BMW shares have fallen more than a third over the past year, reaching their lowest level in more than six years.

Citi analysts said market consensus for BMW’s 2028 margin is already near the upper end of the company’s new target range. After adjusting for exceptional costs expected in 2026 and purchase price allocation changes, Citi said the midpoint implies limited underlying improvement.

BMW’s recovery plan focuses on strengthening its brands, increasing regionalization, simplifying its product portfolio and development processes, lowering fixed and variable costs, adjusting production capacity and expanding the use of artificial intelligence. Citi estimated that BMW’s margin plan includes roughly 250 basis points of improvement from variable costs and about 300 basis points from fixed costs and PPA effects.

The automaker also plans to streamline its dealer network in China, shorten vehicle development lead times and deepen supplier partnerships. From 2027, BMW intends to expand its M and Alpina performance ranges and introduce a luxury SUV positioned above the X7.

BMW will also invest about €2 billion in German production of its next-generation 3 Series sports sedan.

Citi remained cautious, saying BMW’s profitability has fallen to a 25-year low and the recovery plan requires stronger cost execution. The bank also highlighted limited detail on structural industry risks, further European capacity reductions and changes to regional or model-level capital allocation.