Management reduction and AI integration

BMW announced plans on 30 September 2026 to eliminate 20% of its divisions and associated management roles by mid-2027. The reduction begins at the senior vice president level and extends through lower organizational tiers, focusing administrative restructuring around artificial intelligence. The group aims to automate routine engineering tasks and decision-making workflows across development, purchasing, production, sales, and aftersales operations. Chief executive Milan Nedeljković, who took office in May 2026 after leading production, stated that the organization in Munich had become too large to respond quickly to market pressures.

“We are improving our structures and cost base to meet the increasingly fierce competition that will shape this industry in the coming years.”

Chief financial officer Walter Mertl indicated that autonomous AI applications across departments will simplify administrative reporting and accelerate project development. The structural overhaul builds on a July 2026 agreement to cut approximately 8,000 non-production jobs in Germany, representing about 5% of the global workforce, through voluntary departure programs.

Margin recovery and cash flow targets

The restructuring addresses consecutive profit forecast reductions, including a June 2026 downgrade driven by falling sales in China. BMW reported an automotive operating margin of 2.3% in its latest quarterly results. Group targets set an operating margin between 1% and 3% for 2026, with automotive free cash flow exceeding €2.5 billion.

Under the new roadmap presented at its two-day capital markets event, BMW projects an interim operating margin of 3% to 5% and free cash flow above €5 billion by 2028. The long-term target calls for restoring automotive operating margins to between 8% and 10% by the start of the 2030s, accompanied by annual free cash flow exceeding €7 billion.

Regional production and portfolio realignment

Product strategies will shift to reflect divergent regional market demands across Europe, North America, and Asia. In China, where sales have dropped, BMW plans to increase the share of locally produced vehicles tailored to domestic consumer preferences from just under 90% to at least 95% by 2030. The company is also evaluating vehicle exports from Chinese factories into Southeast Asian markets while limiting imports into China strictly to high-margin models.

In the United States, BMW plans to introduce a luxury sport utility vehicle positioned above its existing X7 lineup to utilize production capacity at its plant in Spartanburg, South Carolina. European operations will receive an entry-level fully electric vehicle from the Neue Klasse range in 2028. To cut development expenditures, BMW will discontinue the 2 Series Active Tourer without a successor and remove diesel engine variants from the next-generation 3 Series lineup.

Driver assistance and supply chain partnerships

BMW is also restructuring its technological architecture and supply chain procurement. The automaker plans to deploy navigation-guided driver assistance systems in Germany under the DCAS regulatory framework before rolling out the software to the United States. Level 2++ automated driving capabilities are scheduled for release across China, Europe, and the United States starting in 2027 alongside expanded functions for the Highway Assistant platform. To mitigate semiconductor shortages and raw material constraints, BMW is pursuing joint supply agreements with European Union competitors.