BMW speeds up management cuts as margins stay under pressure

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BMW speeds up management cuts

Highlights

BMW is cutting over 100 managers, including 20% of its 65 senior vice-presidents, as part of accelerated restructuring under CEO Milan Nedeljković.
Group operating margin is projected at only 3% to 5% for the next two years, as BMW struggles with falling revenue (down 8%) and pre-tax profit (down 29%) in H1.
BMW invests 2 billion euros in German manufacturing and plans 40 new or updated models, including a new entry-level premium EV for Europe and a large SUV for the U.S.

Restructuring plan and profit outlook

As reported by Financial Times, BMW is eliminating more than 100 managers as it moves faster to reduce white-collar overheads under chief executive Milan Nedeljković, who has led the company since May. The cuts include roughly 20% of the carmaker’s 65 senior vice-presidents, the tier directly below the management board, as well as additional management roles beneath them.

Some of the reductions come on top of measures announced in June that, according to people briefed on the details, involve about 8,000 back-office job losses, with more than half of those in Germany. BMW says it has reached an agreement with Germany’s union side and plans to seek voluntary redundancies, with buyout offers for eligible staff starting in October.

Nedeljković says the company is improving its structure and cost base to respond to increasingly fierce competition. He tells analysts that group operating margin is expected to reach only 3% to 5% over the coming two years, after a projected 1% to 3% in 2026, and BMW does not expect to return to its longstanding 8% to 10% target until early next decade.

Pressure on sales and product strategy

BMW is bracing for subdued profits after revenue falls 8% in the first half and pre-tax profit drops 29%. The company’s shares are down more than 40% this year, reflecting investor concern over plunging sales in China and the effect of U.S. tariffs.

Unlike Volkswagen, which is planning much deeper job cuts in Germany, BMW is not reducing its domestic assembly line workforce. The company has invested 2 billion euros in its German manufacturing base, including sites in Munich and Dingolfing and a new battery facility in Bavaria, as it begins serial production of the eighth-generation 3 Series.

At the same time, BMW is preparing 40 new models and model updates over the next few years. The carmaker says one of them will be an entry-level premium electric vehicle for Europe comparable to the 1 Series, while it is also developing a larger sport utility vehicle for the U.S. market and ending production of the 2 Series Active Tourer.

Our earlier article on Volkswagen’s restructuring talks in Germany covered rising tensions with IG Metall over proposed changes to parts of the collective bargaining framework affecting around 100,000 workers. It also noted that labor representatives warned strikes could be possible from January 1 as Volkswagen seeks to renegotiate labor standards to cut costs at its main domestic plants.

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