BMW cuts 20% of management and shifts to regional models in turnaround drive

Restructuring management and administration

BMW AG plans to reduce approximately 20% of its management positions by mid-2027 as part of an effort to streamline operations and deploy artificial intelligence across managerial workflows. The reductions will affect multiple administrative layers, including a 20% cut among the carmaker's 65 senior vice-presidents, representing a three-digit total count of managerial staff. These cuts build upon an agreement reached in mid-2026 to eliminate roughly 8,000 back-office positions, more than half of which are based in Germany.

The German automaker reached an accord with domestic labor representatives to execute the workforce reductions through voluntary buyouts, which open to eligible employees in October 2026. Chief executive Milan Nedeljkovic outlined the administrative changes at an investor meeting, framing the restructuring around operational efficiency and rising global competition.

We are improving our structures and cost base so we can meet the increasingly fierce competition.

Regional market strategy and model shifts

Alongside internal cost reductions, BMW is moving away from its traditional globalized export structure in favor of regionalized product portfolios. The group plans to grant development and production autonomy to three core regions: Europe, China, and the United States. Under this approach, regional divisions will engineer and build vehicles tailored specifically to domestic consumer preferences.

The company is preparing to launch 40 new models and vehicle updates over the coming years while discontinuing lower-margin products, including the 2 Series Active Tourer family car. Planned regional introductions include an entry-level electric vehicle comparable in size to the 1 Series for European buyers, alongside a large sport utility vehicle designed for the United States that will exceed the dimensions of the X7.

Financial outlook and restructuring timeline

Presenting the strategy at Gut Schwärzenbach near Lake Tegernsee, Nedeljkovic informed financial analysts that earnings will remain constrained in the near term. The company projects an operating profit margin between 1% and 3% in 2026, suppressed in part by multi-billion-euro charges tied to the severance program. Group operating margins are forecast to reach 3% to 5% by 2028, with a longer-term target of 8% to 10% set for the early 2030s.

The strategic overhaul follows commercial pressure across key territories, including declining deliveries in China and the introduction of US import tariffs. Between January and June 2026, group revenue fell 8% while pre-tax earnings dropped 29%, contributing to a share price decline of more than 40% across the year.

Domestic factory investments and production footprint

While administrative functions undergo contraction, BMW is maintaining its domestic manufacturing workforce on vehicle assembly lines. This contrasts with competitor Volkswagen, which is preparing up to 100,000 job reductions across Germany. BMW has committed 2 billion euros to its German facilities, directing capital into its Munich and Dingolfing plants as well as a new Bavarian battery facility.

The investments support serial assembly for the eighth generation of the 3 Series, the company's core sedan model. Last year, the group produced 2.5 million vehicles and generated 133.5 billion euros in total revenue. Beyond the managerial and back-office buyouts, BMW is reviewing other operational areas for potential savings, with formal decisions scheduled for spring 2027.