German luxury carmaker BMW has announced a comprehensive restructuring plan aimed at restoring investor confidence and addressing the challenges facing the European car industry. The plan, unveiled during a two-day investor event, focuses on artificial intelligence, management cuts, and the launch of two new models. This move comes as BMW seeks to recover from a string of profit warnings and a significant decline in its share price. The company's reputation for stability was hit in June when it issued its third profit warning linked to weak performance in China in just over three years.
The restructuring plan is a response to the current struggles of Europe's car industry, which is facing weak demand, Chinese competition, and US tariffs. BMW's shares have fallen by more than a third over the past year to their lowest level in over six years. As part of the plan, the company will implement a redundancy programme expected to affect around 8,000 jobs in Germany. This move follows similar cost-cutting measures by rivals Volkswagen and Mercedes-Benz. The job cuts are part of BMW's efforts to reduce divisions and associated management roles by a fifth by mid-2027.
BMW has set a medium-term target for margins in its core automotive business of 3%-5% by 2028. The company aims to return to a margin range of 8%-10% by the early 2030s, up from 2.3% in its latest results. Artificial intelligence will play a central role in efforts to streamline the company and speed up decision-making. This will help BMW "meet the increasingly fierce competition that will define this industry in the coming years," according to CEO Milan Nedeljković.
The company is adapting its product strategy to diverging trends in key markets. BMW plans to launch an entry-level electric vehicle for Europe from 2028, while targeting wealthier US consumers with a new luxury SUV. In China, BMW aims to further localise production and rely more on local partners for technologies including autonomous driving and integrated software. The company is also examining potential exports from China to Southeast Asia.
Western carmakers, including BMW, have seen Chinese consumers shift rapidly towards domestic brands, hurting sales in the world's largest auto market, which has long been a key profit driver. US tariffs have added to the pressure, although BMW is less exposed than some rivals due to its plant in Spartanburg, South Carolina. The company is taking steps to reposition itself in the market and address the challenges posed by the shift in consumer preferences.
CEO Milan Nedeljković stated that under increasingly challenging conditions, the company has defined initial measures to reposition itself and will implement them with strong momentum. The plan is designed to help BMW navigate the complexities of the global car industry and restore its position as a leading luxury carmaker. The company's efforts to adapt to changing market trends and consumer preferences will be crucial in determining its future success.
The restructuring plan and new product launches are seen as critical steps in BMW's efforts to regain investor confidence and address the challenges facing the company. With a focus on artificial intelligence, cost-cutting, and adapting to changing market trends, BMW aims to restore its position as a leading player in the global car industry. The company's progress in implementing these measures will be closely watched by investors and industry analysts in the coming months.
Key points
- BMW plans to cut 8,000 jobs in Germany as part of its restructuring plan.
- The company aims to return to a margin range of 8%-10% by the early 2030s.
- BMW will launch an entry-level electric vehicle for Europe from 2028.
