BMW to cut 8,000 jobs as EV margins, China slump squeeze profits

BMW's voluntary severance program targeting 8,000 German jobs by 2027 marks the latest sign of strain in Europe's auto industry as the shift to electric vehicles erodes margins and Chinese competition intensifies.

BMW will offer voluntary redundancy to about 40,000 of its 85,000 permanent German employees starting in October, with production line workers excluded from the program, a company source told AFP. The carmaker aims to reduce its German workforce by roughly 8,000 people by the end of 2027, with most departures expected next year.

"The workforce will ultimately be reduced by around 8,000 people by the end of 2027," the source said, adding that the plan took about six weeks to negotiate between the board and BMW's works council. The Munich-based group employs about 154,000 people worldwide.

The job cuts come after BMW issued a shock profit warning in June, cutting its outlook for the cars business to a margin potentially as low as 1 percent. The carmaker cited weaker-than-expected business in China, where vehicle deliveries last year hit their lowest level since 2017 and fell 30 percent year-over-year in the three months to June. Restructuring costs for the second half of 2026 will likely run into the hundreds of millions of euros, the source said, with the exact figure depending on program uptake.

BMW has so far weathered the EV transition better than many peers by maintaining petrol and diesel options alongside electric models, avoiding costly strategy pivots while still growing EV sales. But slimmer margins on electric cars, US tariffs, and intense competition from Chinese EV makers have forced the company to accelerate cost-cutting efforts. Chief Executive Milan Nedeljkovic said in June the automaker would intensify ongoing cost-reduction programs.

German Auto Industry Under Pressure

BMW is not alone. Volkswagen is weighing up to 100,000 job cuts across its 10 brands, while Mercedes-Benz has its own voluntary redundancy program. Mercedes-Benz CEO Ola Kaellenius, speaking at the carmaker's financial results Tuesday, said the entire sector needed to improve productivity. "The pressure is immense," he said.

Both BMW and Mercedes-Benz have opened or expanded plants in lower-cost Hungary — BMW's new factory there began production last year, while Mercedes-Benz more than doubled the size of its Kecskemet facility this month, making it the company's largest plant in Europe.

Horst Ott, head of IG Metall's Bavarian branch and a BMW supervisory board member, said the company was responding to the slump in China while strengthening the competitiveness of its German sites. But he warned that collective bargaining provisions were non-negotiable and that BMW would also use natural staff turnover to reduce headcount.

Industrial companies in Germany cut 124,000 jobs last year, roughly double the 2024 figure, according to consultancy EY, with losses concentrated in the automotive sector.

Investor Implications

BMW shares face continued pressure as the market prices in weaker China demand and the costs of restructuring. The company's decision to maintain internal combustion engine options alongside EVs has provided some buffer relative to peers, but the profit warning signals that even this dual-strategy approach cannot fully insulate it from the structural challenges reshaping the global auto industry. Investors will watch for further details on cost savings when BMW reports its next quarterly results.

This article is for informational purposes only and does not constitute investment advice.