BMW's Long-Awaited Cost-Cutting Drive Arrives as Auto Margins Collapse to a Fraction of Their Former Level
Published on 08/02/2026 at 03:51 | Redaktion boerse-global.de
The last holdout among Germany's major carmakers has finally capitulated. BMW, which had resisted the wave of restructuring sweeping through the domestic auto industry, is now preparing to shed roughly 8,000 jobs worldwide — a move that brings the Munich-based group in line with rivals that have been trimming headcount for over a year.
The scale of the challenge facing new chief executive Milan Nedeljkovic became starkly apparent in the company's second-quarter results, published on 30 July. Group revenue slipped 7.9 percent to EUR 31.259 billion, marking the tenth consecutive quarterly decline. More alarming still, operating profit tumbled 38.7 percent to EUR 1.631 billion, while the automotive division's operating result cratered by more than 60 percent to just EUR 629 million.
That last figure carries a particularly uncomfortable implication: BMW's financial services arm now generates more profit than its core car-making business. The root cause is no mystery. Sales in China — once a reliable growth engine — plunged by nearly a third in the quarter, with heavy discounting, rising competition from domestic manufacturers, and an influx of returned vehicles all taking their toll.
A Workforce in Transition
The job reduction programme, which runs from October 2026 through the end of 2027, will rely on natural attrition and a voluntary severance package rather than compulsory redundancies. The offer targets employees in Germany outside direct production, potentially reaching tens of thousands of workers. Management expects the measures to deliver annual savings of around EUR 1 billion from 2028 onwards.
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Negotiations between the board and worker representatives stretched over six weeks, with the outcome presented at a company meeting on Wednesday. Nedeljkovic has been candid about the road ahead, telling employees that "the coming period will demand a great deal from all of us" as BMW seeks to restore its profitability and competitive edge.
Martin Kimmich, the group's chief works council chairman, offered qualified support, noting that while other manufacturers have publicly debated plant closures and deeper cuts, BMW's approach has focused on securing binding protections for staff. "We have concentrated on creating security for employees and enforcing binding safeguard mechanisms," he said.
The workforce has already been shrinking. Between mid-2025 and mid-2026, headcount fell by roughly 2,000, and the company's 2026 outlook had anticipated further gradual reductions.
A Sector-Wide Reckoning
BMW's move follows similar — and in some cases larger — cutbacks at Volkswagen, Mercedes, Audi and Porsche. Just this week, Porsche announced an additional 5,000 job losses on top of earlier reductions. Industry analyst Wulf Schlachter describes the moment as a "historic turning point" marking the definitive end of BMW's special status within the German automotive sector.
The pressures are multifaceted: the collapse of the Chinese market with its intensified price competition, US tariffs, growing Chinese rivalry on global markets, and the knock-on effects of the Middle East crisis on the world economy.
Finance chief Walter Mertl framed the restructuring as an acceleration of existing efforts. "After savings of EUR 2.5 billion last year, we are intensifying and speeding up our efficiency measures," he said, citing complexity reduction and a lower cost base as priorities.
Analysts Split on the Outlook
Reaction from the investment community to the earnings figures has been notably divided. Bernstein Research trimmed its price target from EUR 85 to EUR 82 but maintained an "Outperform" rating, with analyst Stephen Reitman noting that expectations were already subdued given the lowered guidance. The DZ Bank took a more cautious stance, downgrading the stock to "Hold" with a fair value of EUR 65. RBC Capital Markets rates the shares "Sector Perform."
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Some observers question whether the programme goes far enough, warning that it could merely mark the beginning of a fresh wave of redundancies. The structural margin problem, they argue, may require more than voluntary departures to resolve.
The share price closed Friday at EUR 59.46, down 1.69 percent on the day but up 4.43 percent for the week — a partial recovery from recent losses. Still, the stock sits barely 5 percent above its 52-week low of EUR 56.40, has lost 36.35 percent over the past year, and remains roughly a quarter below its 200-day moving average of EUR 79.51.
Whether the savings programme will prove sufficient to stabilise profitability in the face of China's continued weakness is a question that will only be answered in the coming quarterly reports — and with the voluntary severance scheme not due to start until October, investors may need patience before the first tangible effects appear.
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