1952–1958: Production resumes in Munich

There were several other shortcomings with the 501 luxury sedan. The cost was approximately DM15,000 — about four times the average German's earnings. It was also much heavier than expected, so the 2.0 L (120 cu in) six-cylinder engine (based on a pre-war design) struggled to provide adequete performance. Construction of the 501 bodies was originally expected to be done in-house, however BMW ended up using bodies built by Karosserie Baur in Stuttgart for more than a year.

In 1954, the 501 model range received some much-needed changes, which resulted in a doubling of sales. The 501 became the 501A and received a price reduction of DM1,000. An entry-level 501B model was introduced, priced at DM1,000 below the 501A. Both models received an upgraded version of the six-cylinder engine. A new BMW 502 flagship model was introduced, with a higher trim level and the new 2.6 L (160 cu in) BMW OHV V8 engine, first V8 engine.

At the same time, BMW sought to offer a more affordable car. Motorcycles were BMW's largest money earner at the time, and their sales had peaked in 1954. Germans were turning away from mopeds and motorcycles toward light automobiles such as the Messerschmitt KR175 and the Goggomobil. After seeing the Iso Isetta bubble car at the 1954 Geneva Motor Show, BMW entered talks with Iso Rivolta and bought both a licence to manufacture the Isetta and all the tooling needed to manufacture its body. Production of BMW's version of the Isetta began in 1955; more than ten thousand Isettas were sold that year. BMW made more than a hundred thousand Isettas by the end of 1958, and a total of 161,728 by the end of production in 1962.

The Isetta chassis was lengthened to create the BMW 600, since BMW knew that it needed a larger four-seat family car to keep up with the rising wealth and expectations of the German people, but could not afford to develop a new model from scratch. The rear-mounted engine was increased in size from 300 to 600 cc (18 to 37 cu in) and the 600's rear suspension was BMW's first use of the semi-trailing arm system that would be used on their sedans and coupes until the 1990s. Released in 1957, the 600 could not compete against the larger, more powerful Volkswagen Beetle. Production ended in 1959 after fewer than 35,000 were built.

Influenced by the public response to the introduction of the Mercedes-Benz 300SL and Mercedes-Benz 190SL in 1954, BMW began development of a sports car based on the platform of the BMW 502 luxury sedan. The styling was contracted out to industrial designer Albrecht von Goertz, who designed a two-seat roadster and a four-seat grand tourer versions. The BMW 507 roadster was introduced at the Waldorf-Astoria Hotel in New York in early 1955, while the BMW 503 four-seater was introduced a few months later. However, high prices would be the downfall of both models. Max Hoffman, the BMW importer for the United States, told BMW that he would order 2000 507s if he could sell them for US$5,000 each. When the selling price was given as about twice that, and higher than the 300SL, he withdrew his offer. 412 units of the 503 and 253 of the 507 were built during their production runs from 1956 (May for the 503, November for the 507) to March 1959.