BMW Seeks Greater Efficiencies But Profitability Gains Will Be Gradual

By Dominic Chopping

BMW is seeking greater efficiencies across the group as it readies for increasingly challenging market conditions ahead, but profitability is expected to improve only gradually over the coming years.

German automakers are doubling down on efforts to slash costs as pressure in the key China sales region intensifies with fierce competition and a shrinking market, while elevated energy costs and the Trump administration's tariff regime are also hitting their bottom lines.

Outlining its strategy at an investor event Wednesday, the company said it must significantly increase speed and efficiency across the group, as it works toward getting its automotive earnings before interest and taxes margin to within 8% and 10% by the start of the next decade.

The margin landed at 5.3% in 2025 and BMW expects no improvement in the interim, targeting between 3% and 5% in 2028.

As part of its plans to save costs and accelerate development, AI will become a key driver, with the automaker planning to further integrate the technology across the group to aid vehicle development, material purchasing, sales and marketing, and aftersales.

At the same time, the number of business divisions and management roles will be cut by 20% over the coming months to streamline the structure, with "a comparable reduction at the organizational levels below," BMW said.

Executives reached agreements with labor representatives in July for an extensive workforce restructuring that could affect up to 8,000 white-collar workers in Germany, a person familiar with the matter previously told The Wall Street Journal. BMW's global workforce was just under 155,000 at end of 2025.

"We are improving our structures and cost base so we can meet the increasingly fierce competition that will define this industry in the coming years," Chief Executive Milan Nedeljkovic said in a statement from Wednesday's event. "The workforce restructuring program is an important lever for this."

BMW said it will also now focus on its most profitable models for individual markets while building more vehicles tailored to the European, U.S. and Chinese markets. The number of model variants will also be streamlined to boost profitability.

In China, the company expects to ramp up domestic production of cars designed for local consumers, while imports will be limited to higher margin models and it will mull exporting more China-made cars to Southeast Asian markets.

The U.S. could see a new top-end sports activity vehicle built specifically for consumers there, as the vehicles--which combine the space of a traditional sports utility vehicle with sporty handling and performance--have proven popular, it added.

BMW's Spartanburg plant in South Carolina produces its X3, X5, X6, X7, and XM sports activity vehicles and coupes, most of which are for export, and the company said that the vehicles global success means the plant is running at full capacity. It is now looking at expanding production of the models in other markets.

Elsewhere, Europe will see new compact models built on its Neue Klasse platform--the new base for its future generation of tech-heavy cars with increased software capabilities.

"Under increasingly challenging conditions, we have defined measures to reposition ourselves and will implement them with strong momentum," Nedeljkovic added.

BMW said a large number of additional measures are currently being evaluated, with decisions expected by spring 2027.

Write to Dominic Chopping at dominic.chopping@wsj.com

(END) Dow Jones Newswires

September 30, 2026 09:14 ET (13:14 GMT)