BY COMFORT OGBONNA
BMW has unveiled a broad restructuring plan focused on artificial intelligence, management cuts and new vehicle launches as the German luxury automaker seeks to strengthen its position amid weak demand, intensifying competition from Chinese manufacturers and higher costs linked to U.S. tariffs.
The strategy was presented Wednesday as the company works to recover from a series of profit warnings and a sharp decline in its share price. BMW has faced growing pressure in China, its largest and most important overseas market, where consumers have increasingly turned toward domestic electric vehicle and technology brands.
The company issued its third profit warning in just over three years linked to weak performance in China in June, adding to concerns about its ability to maintain the level of profitability and market strength it had enjoyed in previous years.
BMW has responded with a workforce reduction program that is expected to affect about 8,000 jobs in Germany. The cuts come as automakers across Europe seek to reduce expenses and adapt to slowing demand, the rapid shift toward electric vehicles and increasing competition from Chinese manufacturers.
BMW shares have fallen by more than a third over the past year, reaching their lowest level in more than six years. The decline has increased pressure on management to provide investors with a clearer strategy for restoring growth and profitability.
The company outlined its recovery plans during a two-day investor event in Bavaria and at its headquarters in Munich.
Under the restructuring plan, BMW aims to reduce the number of divisions and associated management positions by about 20% by the middle of 2027. Artificial intelligence will be used more extensively to simplify internal processes, reduce bureaucracy and accelerate decision-making across the company.
Chief Executive Milan Nedeljković said the changes are intended to help BMW respond to increasing competition in the global automotive industry.
The company has emphasized that the initiative is not simply a cost-cutting exercise, but part of a broader effort to make its operations more efficient and better suited to changing market conditions.
BMW is also adjusting its product strategy to reflect differences in consumer demand across major markets.
In Europe, the automaker plans to introduce an entry-level electric vehicle from 2028 as it seeks to expand its presence in the growing EV market and appeal to a broader range of customers.
In the United States, BMW plans to focus more heavily on wealthier consumers with a new luxury sport utility vehicle, reflecting the continued strength of premium vehicle demand in the market.
China presents a more complicated challenge. BMW plans to increase local production and work more closely with Chinese partners on technologies such as autonomous driving and integrated vehicle software.
The company is also examining the possibility of exporting vehicles produced in China to other markets in Southeast Asia, potentially allowing it to make greater use of its Chinese manufacturing and supply-chain capabilities.
BMW’s strategy reflects the broader changes taking place in the global automotive industry, particularly in China. Western automakers have struggled as Chinese consumers increasingly favor locally produced vehicles that offer competitive pricing, advanced software and electric powertrains.
The shift has weakened the position of several established international manufacturers in the world’s largest automobile market and forced them to reconsider their production, technology and investment strategies.
BMW’s management acknowledged that the speed of change in China had been difficult to anticipate. The company has said the rapid transformation of the market contributed to the cautious forecasts that preceded its recent profit warnings.
U.S. tariffs have added another challenge for European automakers, increasing the cost of vehicles and components moving through international supply chains. BMW is less exposed than some competitors because it operates a major manufacturing facility in Spartanburg, South Carolina, where it produces several models for the North American market.
The automaker’s restructuring comes at a critical point as it attempts to balance investments in electric vehicles, artificial intelligence and software with the need to protect profitability and respond more quickly to changing consumer preferences.
BMW’s new strategy will place greater emphasis on technology, localized production and a streamlined management structure as the company seeks to regain investor confidence and compete in an industry undergoing one of its biggest transformations in decades.
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