BMW wants AI to do its managers’ jobs, plans 20% layoffs across divisions and leadership roles; CEO says: We’re improving our…
BMW is putting artificial intelligence at the centre of its turnaround plan, and the first thing it will reshape is its own management. The German luxury carmaker said it will cut its divisions and the management roles tied to them by 20% by mid-2027. A comparable reduction will follow at the organisational levels below. The logic, as BMW explained it to investors, is that AI will make the company more agile, so it will need fewer layers of managers.The plan was unveiled at BMW’s capital markets day on Wednesday (September 30), held across its Gut Schwaerzenbach retreat in Bavaria and its Munich headquarters. It was the first big investor test for CEO Milan Nedeljkovic, a former BMW trainee and production head who took charge in May. “We are improving our structures and cost base so we can meet the increasingly fierce competition that will define this industry in the coming years,” Nedeljkovic said, adding that the workforce restructuring programme is “an important lever for this.“The cuts build on a deal BMW reached with labour representatives in July. That plan, based on voluntary departures, could affect up to 8,000 white-collar employees in Germany. That is about 5% of a global workforce that stood at just under 155,000 at the end of 2025. BMW’s presentation also confirmed a 20% reduction in senior vice presidents.
BMW wants agentic AI running everything from car development to aftersales
BMW plans to push AI deeper into vehicle development, material purchasing, sales and marketing, and aftersales. CFO Walter Mertl called consistent use of agentic AI across the company “a game-changer” for faster development, leaner structures and quicker decisions.The groundwork is already in place. BMW runs more than 600 AI use cases across its business. Engineers use AI to run crash simulations without building physical prototypes, while procurement teams use it to analyse supplier contracts and draft tender documents.Few large companies name AI as plainly when announcing job cuts. BMW now joins UPS, which cut 12,000 managers, and Lufthansa, which plans to shed 4,000 administrative jobs by the end of the decade. Nedeljkovic, however, maintains that “it’s not a cost-savings programme.”
Falling margins and a China slump are forcing BMW to rethink its strategy
The numbers explain the urgency. BMW’s automotive margin slipped to 2.3% in its latest results, down from 5.3% in 2025. In June, the company issued its third China-linked profit warning in just over three years, saying margins could fall to as low as 1% this year. Its shares have lost more than a third of their value over the past year.BMW now targets a 3% to 5% margin in 2028, with a return to its 8% to 10% range by the early 2030s. Chinese buyers shifting to local brands like BYD, US tariffs and high energy costs have hit German carmakers hard, and Volkswagen and Mercedes-Benz are cutting costs too.The lineup is changing by region as well. Europe gets an entry-level electric car on the Neue Klasse platform from 2028, while the US gets a new high-end SUV. In China, BMW will localise more production, lean on local partners for autonomous driving and software, and weigh exports of China-built cars to Southeast Asia. It has also skipped this month’s Paris motor show.BMW says more measures are under evaluation, with decisions due by spring 2027. The 20% management cut, in other words, may only be the first round.
