BMW Targets Profit Recovery by 2030, Shares Stabilize

BMW is tempering expectations for near-term profitability, forecasting an automotive EBIT margin of 3 to 5 percent by 2028, a downward revision from the 1 to 3 percent previously anticipated for 2026. The announcement, made during the company’s capital markets day, initially sent shares lower before a partial recovery as analysts digested the revised outlook.

Central to the plan is a focus on cost reduction and streamlining operations, particularly within its Chinese business. BMW intends to reduce its workforce by approximately 8,000 positions—representing roughly 5 percent of its 154,540 employees as of year-end 2025—through a restructuring program commencing in October. This move, combined with a reduction in investment and development spending to below 5 percent of revenue by 2027, signals a decisive effort to improve margins. The company also aims to increase the proportion of vehicles specifically designed and sourced locally in China to at least 95 percent by 2030, mirroring a strategy adopted by Volkswagen.

The shift in strategy comes as BMW navigates a challenging environment in China, where demand for premium vehicles has cooled and a price war is intensifying. New CEO Milan Nedeljkovic, who assumed the role in May, is prioritizing localization and cost control to address these headwinds. While the company maintains its long-term target of 8 to 10 percent automotive EBIT margins, it acknowledges this will not be achieved until the early 2030s.

Despite the cautious outlook, analysts view the announcements as a necessary ‘healing process’ for BMW. Bernstein Research initiated coverage with an ‘Outperform’ rating and a price target of €82, citing the company’s commitment to margin improvement. The company projects a free cash flow exceeding €2.5 billion this year, rising to over €5 billion by 2028 and more than €7 billion in the early 2030s. This increased cash flow is expected to support future dividends and potential share buybacks.

The company's projections indicate a significant turnaround in financial performance is required to meet its long-term goals. The planned reduction in investment and development spending, coupled with cost-cutting measures, will be critical to achieving the targeted margin improvements, especially given the current pressures in the Chinese market and the broader automotive industry.