BMW Targets Margin Recovery With AI, Job Cuts, and New Models

BMW has announced a multi-faceted restructuring plan designed to reverse a steep decline in its share price and address recent profit warnings. During a two-day investor event, the German luxury carmaker detailed its strategy, which focuses on cost-cutting, a revamped product lineup, and the use of artificial intelligence to streamline operations.

Path to Profitability

The company set a medium-term target to lift the profit margin in its core automotive business to between 3% and 5% by 2028. This represents a significant step up from the 2.3% margin recorded in its latest results. By the early 2030s, BMW aims to return to its historical target range of 8% to 10%.

Investor confidence in the automaker has been shaken by three profit warnings in just over three years, with its shares falling by more than a third over the past year to a six-year low. The new targets are intended to provide a clear roadmap for recovery.

Restructuring and Product Strategy

To achieve its financial goals, BMW plans a significant operational overhaul. Key measures announced include:

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• Management Reduction: Cutting divisions and associated management roles by a fifth by mid-2027.
• Job Cuts: A redundancy program is expected to affect approximately 8,000 jobs in Germany.
• AI Integration: Leveraging artificial intelligence to accelerate decision-making and improve efficiency.
• New Models: The company is adapting its product strategy with an entry-level electric vehicle for Europe starting in 2028 and a new luxury SUV aimed at the U.S. market.

CEO Milan Nedeljković stated the plan would help BMW "meet the increasingly fierce competition that will define this industry in the coming years."

Navigating Global Challenges

The restructuring comes as the European auto industry faces weak demand, fierce competition from Chinese brands, and the impact of U.S. tariffs. BMW has been particularly affected by a rapid shift in consumer preference toward domestic brands in China, a key market for the company.

In response, BMW plans to further localize its production in China and increase collaboration with local partners on technologies like autonomous driving. "We have defined initial measures to reposition ourselves and will implement them with strong momentum," Nedeljković said, acknowledging the company had not foreseen the speed of change in the Chinese market.