BMW Group has unveiled a sweeping recovery strategy that combines a €2bn investment in German manufacturing with deep internal restructuring, as Europe's automotive industry wrestles with the costly shift to electric vehicles and intensifying competition from Chinese rivals. The plan, presented at the company's Capital Market Day in Munich, sent shares up more than 3% on Wednesday.
The Munich-based carmaker is betting that a leaner model lineup, shorter development cycles, and closer supplier collaboration will restore profitability. By mid-2027, BMW aims to cut the number of divisions and associated management roles by 20%. It also plans to reduce model variants and deploy artificial intelligence more aggressively—from crash simulations to driver-assistance systems.
A €2bn commitment to 'Made in Germany'
At the heart of the plan is a €2bn injection into German production sites, including €1bn for a new high-voltage battery plant in Irlbach-Straßkirchen, Bavaria. The facility, set to begin supplying batteries for the electric BMW i3 in October, is expected to bolster regional value creation and secure skilled jobs in Lower Bavaria.
“We are investing in value creation, competitive production and job security in Germany,” said BMW's production chief Raymond Wittmann. He stressed that the country's industrial future depends on conditions that support investment, innovation, and competitiveness.
The historic Munich plant, which has been in operation for over a century, will be converted to produce only electric vehicles from 2027, including the BMW i3. Meanwhile, combustion-engine and plug-in hybrid versions of the 3 Series will shift to the Dingolfing facility. BMW's Austrian plant in Steyr will produce key electric drive components alongside combustion engines for the new 3 Series.
BMW highlighted that around 760 supplier locations feed the Munich and Dingolfing plants, with more than 70% of them based in Europe and over 30% in Germany. This localisation strategy is part of a broader “local for local” approach, producing vehicles close to their end markets. In China, BMW's Shenyang plant will build a modified 3 Series tailored to Chinese buyers, while the company also trims its dealer network and standardises locally sourced components—a move Bernstein estimates could cut parts costs by 20-30%.
The investment comes as BMW's profitability faces significant pressure. In June, the company issued a profit warning, and in July it agreed to a voluntary redundancy programme expected to reduce its global workforce by around 8,000, according to dpa. An EY analysis found that BMW's operating profit fell 37% to €3.64bn in the first half of 2026, with revenue down 8%—the sharpest decline among 19 carmakers studied. Sales in China dropped 19%, outweighing growth of 6% in Europe and 4% in the US.
BMW's recovery targets are cautious: it aims for an automotive operating margin of 3-5% by 2028, with a return to its long-term goal of 8-10% only by the start of the next decade. That suggests a lengthy climb back to the profitability levels investors once took for granted.
The company's strategy reflects broader challenges facing German industry, from energy costs to geopolitical tensions. As Germany's startup revival shows, innovation is happening, but the automotive sector's scale makes its transformation critical for the country's economic health. The debate over what counts as “Made in Europe” is also relevant, as EU member states clash over local content rules.
BMW's bet on German production is a clear signal that it believes the country can remain a competitive manufacturing hub, provided the right framework conditions are in place. Whether that bet pays off will depend on how quickly the company can execute its restructuring and whether demand for its electric vehicles meets expectations.
