BMW to use AI to cut 20% of senior management roles, plans around 100 job cuts

New business data points to the fact that BMW AG plans to deploy artificial intelligence to eliminate around 20% of its management roles by the middle of next year as part of a buyout plan aimed at reducing costs and improving profitability.

The cuts will come from trimming some divisions and management roles, BMW stated on Wednesday. The changes will additionally extend to softer management marks as the luxury carmaker seeks to become more agile “through the efficient use of artificial intelligence.”

BMW has roughly 65 senior vice presidents, who operate directly below the board, along with another level of around 400 senior positions, according to a person familiar with the firm's structure. This means around 100 high-level jobs are set to be eliminated.

In July, BMW touched a deal to reduce white-collar positions in Germany. The plan targets the removal of around 8,000 positions, or around 5% of the manufacturer's global workforce, according to people familiar with the matter. The propel for voluntary departures comes as BMW deals with a slump in China and fallout from the Middle East conflict.

AI will help streamline “leadership structures through a 20% reduction” of BMW's senior vice presidents and the “corresponding consolidation of management structures,” the firm stated in a presentation.

Most of the positions are located in Munich, Chief Executive Officer Milan Nedeljkovic stated at a media briefing.

BMW is the latest major firm to cite AI as part of efforts to reduce its workforce. United Parcel Service Inc. has trimmed 12,000 managers, while German airline Deutsche Lufthansa AG has outlined plans to trimmed 4,000 administrative jobs to reduce costs.

BMW is being unusually open around AI's role in the job cuts, as many firms stay hesitant to cite the technology as a reason for reducing jobs.

“Consistent use of agentic AI applications across all areas of the firm will be a game-changer for more agile and efficient development, leaner structures and faster decision-making,” BMW Chief Financial Officer Walter Mertl stated.

BMW announced the plans at its capital markets day, the first opportunity for Nedeljkovic to outline steps to revive earnings at the world's largest luxury automaker. The former BMW trainee became CEO in May.

The firm had largely avoided the worst of its rivals' problems linked to the downturn in China. That stated, in June, BMW issued a earnings warning, saying margins could decline to as low as 1% this year.

BMW stated on Wednesday that it aims to return to its long-term auto-margin target of 8% to 10% by the start of the next decade. The firm, which additionally owns the Mini and Rolls-Royce brands, anticipates returns of between 3% and 5% in 2028 as an interim step.

In response to the challenges, Nedeljkovic has been seeking savings. Along with cutting jobs, BMW has pulled out of next month's Paris car show “due to a shift in priorities.”

The firm is additionally reshaping its product lineup to better match customer preferences in different markets, including China, where consumers are increasingly buying local brands such as BYD Co.

BMW additionally plans to target affluent buyers with more models positioned between its BMW and Rolls-Royce brands, potentially competing with vehicles such as Mercedes-Benz Group Co.'s Maybach sedan.

The firm will additionally launch a new entry-level electric car for Europe and a high-end sport utility vehicle for the US. At the same time, BMW plans to stop producing models such as the 2-Series Active Tourer and the diesel version of its 3-Series sedan as it looks to reduce complexity.