BMW bets on cuts, new models and AI to revive its fortunes

By Christina Amann and Rachel More

MUNICH, Sept 30 (Reuters) - BMW set out a restructuring plan on Wednesday centred on AI, management cuts and two new model launches as the German luxury automaker seeks to restore investor confidence after a string of profit warnings and a deep slump in its share price.

As Europe's car industry struggles with weak demand, Chinese competition and US tariffs, BMW's reputation for stability took a hit in June when it issued its third profit warning linked to weak performance in China in just over three years.

The company responded with a redundancy programme expected to affect about 8,000 jobs in Germany, joining rivals Volkswagen and Mercedes-Benz in cutting costs.

BMW, whose shares have fallen more than a third over the past year to their lowest level in more than six years, unveiled the recovery plan during a two-day investor event at its Gut Schwaerzenbach retreat in Bavaria and at its Munich headquarters.

It set a medium-term target for margins in its core automotive business of 3% to 5% by 2028. By the early 2030s, BMW aims to return to a margin range of 8% to 10%, up from 2.3% in its latest results.

By mid-2027, the group aims to cut divisions and associated management roles by a fifth. AI will play a central role in efforts to streamline the company and speed up decision-making, it said.

CEO Milan Nedeljković said that the plans would help BMW "meet the increasingly fierce competition that will define this industry in the coming years."

"It's not a cost-savings programme," said the former production head, who took over as CEO in May.

The group is also adapting its product strategy to diverging trends in key markets, planning an entry-level EV for Europe from 2028 while targeting wealthier US consumers with a new luxury SUV.

In China, BMW plans to further localise production and rely more on local partners for technologies including autonomous driving and integrated software. It is also examining potential exports from China to Southeast Asia.

"Under increasingly challenging conditions, we have defined initial measures to reposition ourselves and will implement them with strong momentum," Nedeljković said, adding that BMW could not have foreseen how rapidly the Chinese market was changing and was therefore cautious with its forecast.

Western carmakers have seen Chinese consumers shift rapidly towards domestic brands, hurting sales in the world's largest auto market, long a key profit driver.

US tariffs have added to the pressure, although BMW is less exposed than some rivals because of its plant in Spartanburg, South Carolina.

(Reporting by Christina Amann and Rachel More. Editing by Ludwig Burger and Mark Potter)