BMW targets 3%-5% auto margin by 2028 after China-linked profit warning

Investing.com -- Munich-based carmaker BMW is targeting an automotive margin of 3% to 5% by 2028 in a recovery plan that follows a June profit warning linked to weakness in China.

Still guessing which names to buy? Our AI rebuilds its stock picks at the start of every month. The list is beating the market by 120%. See what's on it »

Shares of the company were up 1.7% as of 04:21 ET (08:21 GMT).

By the early 2030s, BMW aims to restore margins to 8% to 10% from its most recent result of 2.3%. The company had targeted 1% to 3% for 2026.

The June warning was the carmaker's third in just over three years. BMW responded with a redundancy programme expected to affect about 8,000 jobs in Germany, joining Volkswagen and Mercedes-Benz in cutting costs. Its shares have fallen more than a third over the past year to their lowest in more than six years.

Citi said consensus forecasts for 2028 sit at the top of the target range. It added that, once adjusted for 2026 exceptional costs and changes in purchase price allocation (PPA), the target means little underlying improvement at the midpoint.

Should you buy NVIDIA right now? Before you decide, consider this: an AI-powered list of stock picks is outperforming the market by 120%, and it updates at the start of every month. See this month's picks »

The plan is based on brand strength, more regionalisation, reduced complexity, simplified development costs and times, lower fixed and variable costs, a rebalancing of capacity and AI solutions, Citi said.

BMW's margin bridge suggested about 250 basis points of improvement from variable costs and about 300 basis points from fixed costs, as well as PPA, it said.

BMW also wants to reduce the breadth of its product offering, shorten lead times and deepen partnerships with suppliers. It plans to bring its dealer network in China "to the right size", the news wire report said.

Separately, BMW would confirm a luxury SUV positioned above the X7 and expand its M and Alpina ranges from 2027. BMW also said it would invest about €2 billion in German production of its next-generation 3 Series sports sedan.

Citi said the plans assume "business as usual" and require better execution on costs, even as global demand outside China remains robust. It said BMW's profitability has fallen to 25-year lows.

Citi said the presentation missed a detailed discussion of industry structural and competitive risks, a structural answer that would include further EU and German capacity reductions, and any clear change in capital allocation by region, brand or model. It also noted no new decisions on BMW's capital structure.