BMW wants AI to do its managers' jobs, plans 20% layoffs
BMW will use AI to cut its divisions and management roles by 20% by mid-2027, with similar cuts at lower levels. The carmaker announced the plan at its capital markets day, alongside a margin target of 3% to 5% by 2028. CEO Milan Nedeljkovic said the restructuring will help BMW face fierce competition, as up to 8,000 white-collar jobs in Germany are affected.
BMW is implementing artificial intelligence as a central focus in its restructuring plan, with the initial target being its own management structure. The German luxury automaker intends to reduce its divisions and associated management roles by 20% by mid-2027, with a similar reduction expected in the levels below. This strategy aims to capitalize on AI's ability to make the company more agile and reduce the need for multiple layers of management.
The announcement was made during BMW's capital markets day on September 30 at its Bavarian retreat and Munich headquarters, marking the first major investor presentation for CEO Milan Nedeljkovic, who assumed his role in May. Nedeljkovic emphasized the company's need to adapt to increasingly intense competition in the industry. The workforce restructuring program, based on voluntary departures, could impact up to 8,000 white-collar employees in Germany, representing roughly 5% of its global workforce that totaled under 155,000 at the end of 2025.
The plan also includes a 20% reduction in senior vice president positions. BMW aims to harness agentic AI across various aspects of its operations, including vehicle development, material purchasing, sales and marketing, and aftersales. CFO Walter Mertl called the consistent application of agentic AI across the company a game-changer for faster development, streamlined processes, and quicker decision-making.
BMW has already established a foundation with over 600 AI use cases across its business, utilizing AI for crash simulations without physical prototypes and analyzing supplier contracts and drafting tender documents for procurement teams. The company's decision to highlight AI in its job cuts is not solely for cost-saving purposes but is driven by falling margins and a downturn in China.
BMW's automotive margin decreased to 2.3% in its latest results, down from 5.3% in 2025. In June, the company issued its third profit warning related to China, predicting margins could fall to as low as 1% this year. Its shares have dropped more than a third in value over the past year. BMW targets a 3% to 5% margin in 2028, aiming for the 8% to 10% range by the early 2030s.
The company's challenges arise from Chinese buyers favoring local brands like BYD, US tariffs, and high energy costs, with other major German automakers, such as Volkswagen and Mercedes-Benz, also cutting costs. BMW's restructuring plan varies by region, with Europe introducing an entry-level electric car on the Neue Klasse platform from 2028, the US receiving a new high-end SUV, and China focusing on localizing production, partnering with local entities for autonomous driving and software, and considering exports of cars built in China to Southeast Asia.
The company has also skipped this month's Paris motor show. BMW indicates more measures are under evaluation, with decisions expected by spring 2027. The 20% management cut may be the initial phase of this transformative process.
Written by urgent.news from Times of India's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
