BMW AG plans to cut 20% of senior management roles by the middle of next year. The carmaker will use AI to streamline operations and improve efficiency. Chief Financial Officer Walter Mertl said, "The consistent use of AI agents across the company would help create leaner structures, speed up decision-making."
BMW AG plans to eliminate about a fifth of its senior management positions by the middle of next year as the luxury carmaker steps up the use of artificial intelligence to reduce costs and improve profitability, Bloomberg reported.
The Munich-based automaker said on Wednesday that it would streamline divisions and management positions as part of an agreed buyout programme. The restructuring is expected to affect lower levels of the organisation as BMW seeks to make its operations more agile through greater use of AI.
BMW has about 65 senior vice presidents reporting directly to the board, followed by roughly 400 senior positions. The planned cuts could therefore affect about 100 high-level positions.
Most of the cuts in Germany
The company said in a presentation that it would use AI to streamline its leadership structure through a 20% reduction in senior vice presidents, alongside a consolidation of management structures.
Most of the affected positions are based in Munich, BMW Chief Executive Officer Milan Nedeljkovic said at a media briefing, according to Bloomberg.
The move comes after BMW agreed in July to reduce white-collar jobs in Germany. People familiar with the matter had estimated that the plan could eliminate about 8,000 positions, or roughly 5% of the company's global workforce, through voluntary departures.
Falling profit margins
BMW is facing pressure from weaker demand in China and the fallout from the conflict in the Middle East. The company warned in June that its automotive profit margin could fall to as low as 1% this year.
BMW Chief Financial Officer Walter Mertl said the consistent use of AI agents across the company would help create leaner structures, speed up decision-making and improve efficiency.
The company is targeting a return to its long-term automotive margin range of 8% to 10% by the beginning of the next decade. It expects an interim margin of 3% to 5% in 2028.
AI-led restructuring
BMW's AI-led restructuring comes as other large companies also look to reduce management and administrative roles. United Parcel Service has cut 12,000 managers, while German airline Deutsche Lufthansa has outlined plans to eliminate 4,000 administrative positions.
Nedeljkovic, who became BMW's CEO in May, is also reshaping the company's product strategy as it seeks to revive profitability. BMW plans to adjust its lineup to local consumer preferences, particularly in China, where domestic manufacturers such as BYD have gained ground.
The company also plans to introduce more vehicles positioned between its BMW and Rolls-Royce brands, potentially competing with Mercedes-Benz's Maybach range. It is also preparing a new entry-level electric vehicle for Europe and a high-end SUV for the US.
At the same time, BMW plans to simplify its product portfolio by ending production of models including the 2-Series Active Tourer and the diesel version of its 3-Series sedan.