BMW Launches AI-Driven Restructuring Plan to Restore Profits and Growth
BMW's Strategic Response to Industry Challenges
By Christina Amann and Rachel More
AI Integration and Management Restructuring
MUNICH, Sept 30 (Reuters) - BMW set out a restructuring plan on Wednesday centred on AI, management cuts and two new model launches as the German luxury automaker seeks to restore investor confidence after a string of profit warnings and a deep slump in its share price.
Industry Pressures and Profit Warnings
As Europe's car industry struggles with weak demand, Chinese competition and US tariffs, BMW's reputation for stability took a hit in June when it issued its third profit warning linked to weak performance in China in just over three years.
Cost-Cutting Measures and Job Reductions
The company responded with a redundancy programme expected to affect about 8,000 jobs in Germany, joining rivals Volkswagen and Mercedes-Benz in cutting costs.
Investor Event and Financial Targets
BMW, whose shares have fallen more than a third over the past year to their lowest level in more than six years, unveiled the recovery plan during a two-day investor event at its Gut Schwaerzenbach retreat in Bavaria and at its Munich headquarters.
Margin Goals and Timeline
It set a medium-term target for margins in its core automotive business of 3% to 5% by 2028. By the early 2030s, BMW aims to return to a margin range of 8% to 10%, up from 2.3% in its latest results.
Role of AI in Streamlining Operations
By mid-2027, the group aims to cut divisions and associated management roles by a fifth. AI will play a central role in efforts to streamline the company and speed up decision-making, it said.
CEO's Perspective on the Restructuring
CEO Milan Nedeljković said that the plans would help BMW "meet the increasingly fierce competition that will define this industry in the coming years."
"It's not a cost-savings programme," said the former production head, who took over as CEO in May.
Product Strategy and Market Adaptation
New Model Launches and Market Segmentation
The group is also adapting its product strategy to diverging trends in key markets, planning an entry-level EV for Europe from 2028 while targeting wealthier US consumers with a new luxury SUV.
China Market Focus and Localization
In China, BMW plans to further localise production and rely more on local partners for technologies including autonomous driving and integrated software. It is also examining potential exports from China to Southeast Asia.
Adapting to Rapid Market Changes
"Under increasingly challenging conditions, we have defined initial measures to reposition ourselves and will implement them with strong momentum," Nedeljković said, adding that BMW could not have foreseen how rapidly the Chinese market was changing and was therefore cautious with its forecast.
Global Market Pressures
Competition from Chinese Brands
Western carmakers have seen Chinese consumers shift rapidly towards domestic brands, hurting sales in the world's largest auto market, long a key profit driver.
US Tariffs and BMW's Position
US tariffs have added to the pressure, although BMW is less exposed than some rivals because of its plant in Spartanburg, South Carolina.
(Reporting by Christina Amann and Rachel More. Editing by Ludwig Burger and Mark Potter)
