BMW Plans 20% Management Cut and Deep AI Integration to Boost Efficiency

BMW plans to cut its number of divisions and management roles by about 20% in the coming months as part of a broad restructuring to flatten its organizational structure and increase the use of artificial intelligence. According to a Wall Street Journal report based on an announcement by the German automaker at an investor event, AI will become a central tool for cost reduction and accelerating development processes.

Expanding AI and Restructuring Management

BMW intends to expand the use of AI in vehicle development, raw material procurement, sales, marketing, and after-sales service. The company estimates that the technology will enable it to perform more tasks with fewer employees and operate in a leaner, faster organizational structure. The cuts are not expected to stop at the top management layer, with BMW noting a similar reduction expected in lower organizational tiers.

"We are improving our structure and cost base so that we can cope with the intensifying competition that will shape the industry in the coming years," said BMW CEO Milan Nedeljkovic.

Market Challenges and Financial Targets

The move comes as German automakers ramp up efficiency efforts amid deteriorating market conditions. Competition in China is intensifying, the domestic car market is shrinking, European energy costs remain high, and tariff policies under the Trump administration are weighing on profitability. BMW aims to raise its automotive division operating profit margin to 8%-10% by the beginning of the next decade, down from 5.3% in 2025, with a 2028 target of 3%-5%.

Regional Strategy and Future Models

In addition to workforce reductions, BMW plans to streamline model variants and focus on profitable vehicles per market:

China: Increase local production of consumer-tailored cars and explore exports to Southeast Asia.
United States: Consider launching a luxury SUV developed specifically for the local market.
Europe: Expand compact model offerings based on the new Neue Klasse platform featuring advanced software capabilities.