1959–1968: Near bankruptcy and New Class

By 1959, BMW was in debt and losing money. The Isetta was selling well but with small profit margins. Their 501-based luxury sedans were not selling well enough to be profitable and were becoming increasingly outdated. Their 503 coupé and 507 roadster were too expensive to be profitable. The BMW 600, a four-seater based on the Isetta, was selling poorly. The motorcycle market imploded in the mid-1950s with increasing affluence turning Germans away from motorcycles and toward cars. BMW had sold their Allach plant to MAN in 1954. American Motors and the Rootes Group had both tried to acquire BMW.

At BMW's annual general meeting on 9 December 1959, Dr. Hans Feith, chairman of BMW's supervisory board, proposed a merger with Daimler-Benz. The dealers and small shareholders opposed this suggestion and rallied around a counter-proposal by Dr. Friedrich Mathern, which gained enough support to stop the merger. At that time, the Quandt Group, led by half-brothers Herbert and Harald Quandt, had recently increased their holdings in BMW and had become their largest shareholder. By the end of November 1960, the Quandts owned two-thirds of BMW's stock between them.

By this time, BMW had launched the BMW 700, a small car with a rear-mounted 697 cc (43 cu in) engine (based on the BMW R67 motorbike engine). The 700 was available as a 2-door sedan, a coupe and a "RS" model for racing.

In 1960, the development program began for a new range of models, called the "Neue Klasse" (New Class) project. The resulting BMW New Class four-door sedans, introduced in 1962, are credited for saving the company financially and establishing BMW's identity as a producer of sports sedans. The New Class had front disc brakes and four-wheel independent suspension, which helped establish BMW's reputation for sporting cars. It was the first BMW to officially feature the "Hofmeister kink", the rear window line that has been a styling feature of most BMWs since. By 1963, with the company back on its feet, BMW offered dividends to its shareholders for the first time since World War II.

In 1965, the New Class range was expanded with the New Class Coupés luxury models. The following year, the two-door version of the 1600 was launched, along with a convertible in 1967. These models began the BMW 02 Series, of which the 2002 sports sedan model was the best known.

BMW acquired the Hans Glas company based in Dingolfing, Germany, in 1966. Glas vehicles were briefly badged as BMW until the company was fully absorbed. It was reputed that the acquisition was mainly to gain access to Glas’ development of the timing belt with an overhead camshaft in automotive applications, although some saw Glas’ Dingolfing plant as another incentive. However, this factory was outmoded and BMW's biggest immediate gain was, according to themselves, a stock of highly qualified engineers and other personnel. The Glas factories continued to build a limited number of their existing models, while adding the manufacture of BMW front and rear axles until they could be closer incorporated into BMW.