Bayerische Motoren Werke Aktiengesellschaft (ETR:BMW) said its recently announced portfolio and structural measures are intended to support profitability over the coming years, while executives reaffirmed the company’s 2028 operating EBIT margin target of 3% to 5%.
Chief Financial Officer Walter Mertl said the measures are part of an accelerated restructuring effort and should contribute positively to future profitability, though the company did not provide a detailed breakdown of their financial effect or timing. Mertl pushed back on the suggestion that the company had said the 2028 margin target could be reached ahead of schedule.
“We just confirmed our 3%-5% in 2028 out of EBIT margin,” Mertl said. “All these measures are supportive to achieve that.”
Restructuring charges weigh on fourth-quarter margin
Mertl said BMW expects restructuring processes to account for 2.5 EBIT percentage points for the full year. Because much of the impact falls in the fourth quarter, he said the quarterly effect would be roughly 10 percentage points, including the newly announced portfolio and structural measures.
BMW also said its fourth-quarter operating margin is typically weaker than earlier periods because of seasonality, including inventory management and fixed-cost effects. Mertl said the underlying fourth-quarter margin would likely be in the range of zero to 1%, before considering the additional restructuring-related charges.
Despite reducing its volume guidance, BMW reaffirmed that it expects an operational EBIT margin of more than 2% and free cash flow of more than €2.5 billion in 2026. Mertl said the company’s revised volume outlook alone would not have required an ad hoc announcement; the disclosure was prompted by the expanded portfolio and structural actions.
The company did not provide 2027 profit or cash-flow guidance, saying it would address those figures in March. Mertl said the restructuring efforts should have positive effects in 2027, but declined to quantify cash outflows or profit-and-loss benefits at this stage.
Regarding the company’s dividend, Mertl said BMW is considering the effect of the additional portfolio and structural measures when evaluating shareholder distributions. However, he said the final decision, including any payout ratio, will be made in February.
China remains volatile, with Neue Klasse launches expected to help
Chief Executive Officer Milan Nedeljković described China as a “dynamic and volatile” market. He said BMW was surprised by a sharp decline in internal-combustion-engine demand during the second quarter, noting that the broader ICE market fell by more than 20% and that BMW was also affected.
More recently, Nedeljković said BMW has maintained a solid level of sales and gained market share in the ICE segment. He said the company sees the launch of its next-generation electric models as important to stabilizing volumes next year.
BMW cited favorable customer and journalist feedback on the iX3 and i3 presentations in China, with Nedeljković saying the company’s technology stack had been viewed as highly competitive. BMW is preparing to launch the iX3 in China toward the end of the month, followed by the i3 presentation in January and the iX5 in early second quarter, according to Mertl.
The company declined to provide future China volume assumptions, citing market volatility. Investor Relations head Stefan Richmann said BMW’s monthly China volume run rate has recently been in the 30,000-unit range, fluctuating within that corridor, but emphasized that those figures precede the iX3 launch.
BMW also declined to disclose iX3 profitability in China or provide reservation and order figures. Richmann noted that reservations in China do not carry the same mandatory payment obligation as orders in Europe.
Technology, capacity and financial-services trends
Nedeljković said BMW will initially use nickel-manganese-cobalt cylindrical battery technology in its Neue Klasse vehicles, including the iX3 and i3, arguing that the technology is currently superior in the market. He added that BMW plans to introduce lithium-iron-phosphate batteries selectively in certain vehicles and applications, rather than across all segments.
On European production, Nedeljković said BMW does not currently see a need to alter plant capacity despite rising battery-electric vehicle adoption in parts of the region. He said each of BMW’s European plants can produce both combustion-engine and fully electric vehicles, giving the manufacturer flexibility to follow market demand. The Debrecen plant, which will produce Neue Klasse vehicles, is set up for three shifts, he said.
Mertl said BMW is seeing a modest deterioration in ICE residual values, which the company had anticipated. However, he said residual-value performance for EVs has improved since February, while used-car pricing in the U.S. has been positive for both ICE and EV models. Trends vary by region, he added.
BMW expects free cash flow in the fourth quarter to be influenced primarily by working-capital movements and tariff reimbursements. Mertl said the company submitted relevant tariff claims by the end of September and generally expects payment within 90 days, though he noted reimbursements have often arrived in roughly 50 days.
On potential applications for artificial intelligence beyond automotive operations, Nedeljković said BMW has developed notable industrial AI capabilities and is pursuing cooperation in multiple fields. He cautioned, however, that the opportunity should not be viewed as a second business comparable in scale to the company’s core automotive operations.
About Bayerische Motoren Werke Aktiengesellschaft (ETR:BMW)
Bayerische Motoren Werke Aktiengesellschaft, together with its subsidiaries, engages in the development, manufacture, and sale of automobiles and motorcycles, and spare parts and accessories worldwide. It operates through Automotive, Motorcycles, and Financial Services segments. The Automotive segment engages in the development, manufacture, assembling, and sale of automobiles, spare parts, accessories, and mobility services under the BMW, MINI, and Rolls-Royce brands. The Motorcycles segment develops, manufactures, assembles, and sells motorcycles and scooters under the BMW Motorrad brand, as well as spare parts and accessories.
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