BMW to cut 20% of senior management roles by mid-2027 as AI reshapes operations

BMW plans to eliminate about 20% of its senior management roles by the middle of 2027 as the German luxury carmaker uses artificial intelligence to streamline its organisation and speed up decision-making.

The restructuring comes as BMW attempts to protect profitability amid weaker demand in China, growing competition from Chinese carmakers and the economic impact of conflicts in the Middle East. The company is also reducing the number of divisions and management layers as part of a broader organisational overhaul.

Around 100 senior positions could be removed

BMW has about 65 senior vice presidents reporting directly to the board, along with roughly 400 senior management positions below them, according to Bloomberg. A 20% reduction across those levels could therefore affect about 100 high-level positions.

The company said divisions and management layers would be consolidated under an agreed buyout programme. Chief executive Milan Nedeljkovic said most of the positions affected by the management restructuring are based in Munich.

The planned reduction comes alongside a broader programme agreed in July to reduce BMW's white-collar workforce in Germany. People familiar with that plan told Bloomberg that around 8,000 jobs could eventually be affected through voluntary departures, equivalent to about 5% of BMW's global workforce. Reuters previously reported that the programme focuses on administration and development roles, while production operations are being spared.

AI to drive a leaner organisation

BMW's management changes are part of a wider push to use artificial intelligence across the company.

Finance chief Walter Mertl said AI agents could help create leaner organisational structures and allow decisions to be taken more quickly. Reuters reported that BMW intends to significantly expand AI across its value chain, with the technology eventually supporting processes from initial technical requirements through testing and release.

The restructuring follows a difficult period for the company. BMW's automotive operating margin was 2.3% in its latest reported quarter, down from 5.4% a year earlier, while second-quarter pre-tax profit fell 35% to €1.7 billion. The company had also cut its full-year outlook after weaker-than-expected business in China.

BMW aims to return its automotive business to an operating margin of 8% to 10% by the beginning of the next decade. Its interim target is a margin of 3% to 5% in 2028.

China remains a major challenge

BMW's restructuring comes against the backdrop of a sharp shift in China's car market, where domestic manufacturers such as BYD have gained ground.

The company plans to increase local production of high-volume models in China while limiting imports to vehicles with the highest profit margins. BMW wants at least 95% of the vehicles it sells there to be locally produced and specifically tailored to Chinese customers by 2030, compared with just under 90% currently. It is also considering exporting vehicles made in China to markets in Southeast Asia.

Reuters reported that BMW's global sales fell about 5% in the second quarter, with sales in China dropping by around 30%. The company has said the Chinese market has been changing faster than it anticipated, putting additional pressure on its traditional business model.

Model range to be reshaped

Alongside the management changes, BMW is revising its vehicle portfolio to better match regional demand.

The company plans a new entry-level fully electric model for Europe from its Neue Klasse range in 2028. In the US, it plans to add a luxury SUV positioned above the current X7 range. BMW is also seeking greater regionalisation of production, particularly as its Spartanburg plant in South Carolina is operating at full capacity because of demand for luxury SUVs.

BMW plans to reduce the number of model variants across its portfolio. The 2-Series Active Tourer will not receive a successor, while the diesel-powered 3-Series is also due to be discontinued.

The strategy is intended to allow BMW to tailor its vehicles more closely to regional preferences, particularly in China, while maintaining premium positioning in markets such as the US and Europe.

Wider industry restructuring

BMW's management cuts are part of a broader restructuring trend across the global transport industry.

United Parcel Service has also eliminated 12,000 managerial positions, while Lufthansa plans to cut about 4,000 administrative jobs. German carmakers have similarly announced workforce reductions as the industry faces weaker demand, rising competition from China, the expensive transition to electric vehicles and geopolitical uncertainty.

BMW's latest plan combines management consolidation, voluntary workforce reductions, wider use of AI and a streamlined vehicle range as the company seeks to improve profitability over the coming years.