Like other established automakers,BMWis suffering at the hands of Chinese firms, and is looking to shore up its financial position by reducing headcount.
A BMW spokesperson toldReutersthe Bavarian automaker and its employee representatives have agreed to a voluntary severance program which will cut 8000 jobs by the end of 2027. Recently appointed CEO Milan Nedeljkovic and the works council are scheduled to announce the plan to employees later today.
The spokesperson said production jobs will be unaffected, with severance only being offered in the administration and development divisions. It’s understood most of the job losses will take place in Germany, but there will be some people retrenched overseas as well.
With BMW currently employing around 150,000 globally, the job cuts will trim its headcount by 5.3 per cent. Of its 150,000 employees, around 87,000 work at locations in Germany.
Last month BMW issued a profit warning, with the automaker forecasting deteriorating sales in China and softer demand throughout the world thanks to the war in the Middle East.
The company now expects to have an operating profit margin of between one and three per cent for the current year. That’s down from around 5.5 per cent last year, and almost 10 per cent in 2023.
BMW has already cut back spending in research and development. Last week BMW announced it would be pulling out of the Paris motor show in October, telling Bloomberg this was “due to a shift in priorities”, although the company remains “committed to a selective presence at automotive shows in the future”.
As is the case with many foreign automakers, China has gone from being a rich seam of sales and a large profit centre for BMW to a problem child within a matter of years. This is largely down to the rapid acceptance of Chinese automakers, especially those with electric, plug-in hybrid and extended-range electric vehicles.
Chinese brands have also made significant in-roads into other key markets, including Asia, Europe and Latin America.
This has forced Volkswagen to contemplate deep cuts, including reducing its model range by half and closing four German factories, although the latter idea was rejected by the company’s supervisory board. Other manufacturers, such as Stellantis and Ford, are selling off their European production capacity to Chinese firms, and also utilising their platforms for new models.
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