BMW will cut 20% of its management staff. The company is betting on AI

BMW plans to cut about 20% of its senior management positions by mid-2027. The automaker intends to make greater use of artificial intelligence to improve operational efficiency, while simplifying its management structure and reducing the number of leadership positions.

BMW announced that it will cut about 20% of its senior vice presidents (SVPs)—there are approximately 65 of them at the company, according to a Bloomberg source. The changes will also affect lower levels of management. According to the agency, there are about 400 executives at the level immediately below SVP. As a result, the automaker will lay off about 100 senior managers, the agency reports.

BMW explained the need for these measures as follows: by making effective use of AI, the automaker intends to increase operational flexibility and efficiency, which will require a significant streamlining of the management hierarchy.

“The systematic implementation of agent-based AI applications across all areas of the company will be a turning point that will enable us to create more flexible and efficient processes, more streamlined structures, and accelerate decision-making,” — said Chief Financial Officer Walter Mertl in a press release.

This is part of a voluntary layoff program designed to reduce BMW's costs and boost profitability, Bloomberg notes. In July, the company reached an agreement with its employees to cut about 8,000 jobs, most of which are in Germany. This represents approximately 5% of its global workforce, Bloomberg notes.

Until recently, BMW had largely managed to avoid the most serious problems its competitors faced due to the downturn in China. However, in June, the company surprised investors by lowering its profitability forecast for the automotive business from 4–6% to 1–3%, citing the deteriorating situation in the Chinese passenger car market.

On Wednesday, BMW announced that it expects to return to its long-term target range of 8–10% by the start of the next decade. In 2028, BMW anticipates an interim figure of 3–5%.

In addition to streamlining its workforce, the automaker has decided not to participate in the Paris Auto Show and is revising its model lineup to better reflect customer preferences in different regions around the world, including China, where consumers are increasingly opting for local brands such as BYD.

In addition, the company plans to attract the most affluent buyers with new models designed to fill the niche between BMW and Rolls-Royce vehicles. Bloomberg suggests that the company will likely compete in this segment with cars such as Mercedes-Maybach sedans.

This article was AI-translated and verified by a human editor