BMW’s management and employee representatives have agreed on a restructuring plan that will eliminate 8,000 jobs worldwide, according to German business newspaper Handelsblatt.
The reductions are expected to begin in October and continue until the end of 2027. BMW aims to save around €1 billion annually from 2028, following six weeks of negotiations between management and workers’ representatives.
Reductions to focus on administrative roles
The plan provides for the positions to be eliminated in what the company describes as a socially responsible manner, including through regular and phased retirements and voluntary redundancy packages.
The compensation scheme will apply only to employees in Germany, where most of the reductions are expected to take place. Its total cost is estimated at approximately €1 billion.
Most of the cuts will affect indirect roles, meaning employees who do not work on vehicle assembly lines. Staff at BMW’s headquarters in Munich and at its Research and Innovation Centre, known as FIZ, are expected to be among those affected.
Employment guarantees to remain in place
BMW’s management is also expected to reaffirm the company’s existing employment guarantee, which remains valid for as long as the manufacturer records a pre-tax profit.
Holiday allowances and Christmas bonuses will remain unchanged, although BMW reduced the value of its Christmas bonus two years ago.
Unlike some of its German competitors, BMW plans to leave its production operations largely unaffected by the restructuring, particularly at its factories in Germany.
Volkswagen’s cost-cutting plans could reportedly result in the closure of four plants and the elimination of up to 50,000 jobs. Porsche, which is part of the Volkswagen Group, also recently announced plans to cut 5,000 positions.
Pressure grows in the Chinese market
BMW is facing considerable challenges in China, which for years served as one of the company’s main sources of profit.
Industry analysts estimate that, during stronger years, around half of the profits generated by Germany’s premium vehicle manufacturers came from the Chinese market.
That position has weakened amid an intense price war in the electric vehicle sector and a sharp decline in demand for cars powered by internal combustion engines.
BMW’s factories in China are now reportedly operating at only 50% to 60% of their production capacity.
Tariffs weigh on earnings outlook
The company is also being affected by United States tariff policies and the wider trade dispute involving Europe, the US and China.
As a result, the Bavarian manufacturer now expects a significant decline in profits of around 15%, revising its previous forecast of a more moderate reduction.
Source: CNA
