BMW's profit plunges 39% as it plans 8,000 job cuts in Germany

BMW reported second-quarter earnings before interest and taxes that tumbled 39% from a year earlier, as the German luxury carmaker grapples with weakening demand in China and headwinds from currency and commodity markets.

"The situation is critical," Chief Executive Milan Nedeljkovic told staff at a meeting announcing the results, according to an employee present. "We are talking about a substantial change to the rules of the game."

The EBIT decline came as BMW's vehicle deliveries in China fell 30% year-over-year in the three months through June, deepening a slide that last year pushed sales in the country to their lowest since 2017. The company issued a profit warning in June, citing a sharper-than-expected slowdown in its largest single market. Specific revenue and earnings-per-share figures, along with consensus estimates, were not yet disclosed.

The Munich-based automaker plans to cut about 8,000 jobs in Germany by the end of 2027 through a voluntary redundancy program, a company source said. About 40,000 of BMW's roughly 85,000 permanent German employees — those in desk-based roles — will receive the offers starting in October, while production line workers will be spared. BMW employs about 154,000 people worldwide.

The restructuring follows similar moves across Germany's automotive industry. Volkswagen is weighing up to 100,000 job cuts across its 10 brands, while Mercedes-Benz has its own voluntary redundancy program. Porsche, a Volkswagen subsidiary, this week expanded its restructuring with plans to reduce its workforce by about 20% by 2035.

BMW had been widely seen as better positioned than its domestic peers, having maintained petrol and diesel options alongside its electric vehicle lineup. But the profit warning last month signaled the pressure had caught up. Nedeljkovic blamed European regulations that force EV sales despite patchy demand, as well as rising tariff barriers globally.

"Neither the protectionism nor far-reaching changes in the market are going to disappear," he told staff.

Horst Ott, head of the Bavarian branch of the IG Metall union who sits on BMW's supervisory board, said the company is responding to the slump in China while trying to strengthen the competitiveness of its German sites.

The 39% EBIT decline signals deepening operational strain at BMW, with the China headwind showing no signs of easing. Investors will watch for the company's full second-quarter financial report and any updated guidance on margins and cost targets.

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