BMW's strategy: Job cuts, AI and a €2bn bet on ‘Made in Germany’
German premium carmaker BMW Group is investing around €2 billion in vehicle production and battery manufacturing in Germany, as it unveils plans to rebuild profitability.
BMW shares surged more than 3% on Wednesday as the company unveiled its recovery plans during its Capital Market Day event. German automakers are striving to boost profitability amidst the challenges posed by electric vehicle transition, global supply chain disruptions, high energy costs, and intense competition from Chinese automakers.
To enhance profitability, BMW aims to streamline its model lineup, expedite development timelines, and collaborate more closely with suppliers. Simultaneously, the company plans to decrease the number of divisions and managerial positions by 20% by mid-2027, as part of a broader restructuring. Additionally, BMW intends to decrease the variety of model variants and leverage artificial intelligence (AI) extensively, such as in crash simulations and driver assistance systems.
In an effort to achieve an automotive operating margin between 3% and 5% by 2028 and a long-term goal of 8% to 10% from the beginning of the next decade, BMW has committed to a €2 billion investment in Germany. This includes a €1 billion allocation for a battery plant. Raymond Wittmann, BMW's production chief, stated that the company is investing in value creation, competitive production, and job security in the country.
The Munich plant, which is over 100 years old, will transition to producing only electric vehicles starting in 2027, including the BMW i3, while combustion-engine and plug-in hybrid versions of the BMW 3 Series will be manufactured in Dingolfing. BMW emphasizes that approximately 760 supplier locations support the Munich and Dingolfing plants, with more than 70% located in Europe and over 30% in Germany.
BMW's Irlbach-Straßkirchen facility in Bavaria will produce high-voltage batteries for the electric BMW i3 starting in October. The battery plant is expected to enhance regional value creation, secure skilled jobs, and contribute to the industrial ecosystem in Lower Bavaria. Wittmann highlighted that the new high-voltage battery plant showcases BMW's commitment to bringing key electric vehicle technology back to Germany.
The Steyr plant in Austria will manufacture key electric drive components and combustion engines for the new 3 Series range. BMW currently produces over one million vehicles annually in its German plants, accounting for a quarter of the country's total car production.
Moreover, BMW adheres to a "local for local" strategy, producing cars near the markets they serve. In China, the company plans to develop a modified version of the 3 Series aimed at Chinese consumers, reduce its dealer network, and utilize locally sourced components, which could lower part costs by 20% to 30%, according to Bernstein.
BMW's production plans unfold as the company faces pressure on profitability. In June, BMW issued a profit warning, and in July, it agreed to a voluntary redundancy program expected to reduce its global workforce by around 8,000 employees, according to dpa and company sources. EY analysis indicates that BMW's operating profit fell by 37% to €3.64 billion in the first half of 2026, with revenue declining by 8%, the steepest decline among the 19 carmakers examined.
The company's vehicle sales in China decreased by 19%, outpacing growth of 6% in Europe and 4% in the United States.
Written by urgent.news from Euronews Business's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
