BMW to Cut Management Roles by 20%, Expand AI Use
German automaker BMW announced a restructuring plan that includes reducing management positions by approximately 20% and increasing the application of artificial intelligence. The move aims to boost efficiency and adapt to market challenges.
German luxury automaker BMW has unveiled a significant restructuring initiative aimed at improving its financial performance and competitive standing in the global automotive market.
The plan centers on three key areas: expanding the use of artificial intelligence (AI), streamlining management structures, and introducing two new vehicle models. These changes come as the European auto industry faces subdued demand, intensified competition from Chinese manufacturers, and trade pressures.
BMW plans to cut approximately one-fifth of its divisions and corresponding management positions by mid-2027. AI is intended to enhance organizational efficiency and accelerate decision-making processes. Milan Nedeljković, head of production and newly appointed CEO, stated the measures are designed to address increasing industry competition and are not solely cost-cutting efforts.
The restructuring also involves adjusting the product portfolio to meet evolving market demands. Europe will see a new entry-level electric vehicle by 2028, while the U.S. market will receive a new luxury SUV aimed at affluent consumers. In China, BMW is increasing local production and collaborating with domestic partners on technologies like autonomous driving and software integration.
The company has issued multiple profit warnings recently, and its stock price has declined substantially. BMW's mid-term target for its core automotive business operating margin is 3-5% by 2028, with a goal to reach 8-10% in the early 2030s. The latest reported margin was 2.3%.