Business

BMW Just Announced It’s Replacing Several Management Roles With AI

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BMW announced Wednesday it planned to slash its management structure by 20% while expanding the use of artificial intelligence across its operations.

The luxury carmaker said it will reduce the number of divisions and associated management roles by 20% by mid-2027, with comparable reductions at lower organizational levels. BMW said AI will play a central role in making the company more efficient, speeding up decision-making and automating routine work across development, manufacturing, purchasing, sales and other operations.

The restructuring comes as BMW faces weak European demand, growing competition from Chinese automakers and U.S. tariffs, while its shares have fallen more than 30% over the past year, according to Reuters. The automaker is also seeking to restore its automotive operating margin after it fell to roughly 2.3% in its latest results.

“Consistent use of agentic AI applications across all areas of the company will be a game-changer for more agile and efficient development, leaner structures and faster decision-making,” BMW finance chief Walter Mertl said.

BMW’s plan suggests AI will increasingly perform work that has traditionally moved through layers of managers, including analyzing information, coordinating workflows and handling routine decisions. The company said using AI across its operations would support “leaner structures” and faster decision-making as it reduces divisions and management positions, tying the technology directly to its broader push to operate with fewer organizational layers.

BMW said artificial intelligence will increasingly be integrated directly into core vehicle development processes, including technical requirements, testing and release. Specialized AI agents will analyze complex information and automate routine tasks, while developers will continue to monitor, review and approve the results.

The company already uses AI throughout its factories for digital twins, quality inspections and autonomous transportation systems and plans to have digital AI agents perform increasingly challenging tasks autonomously.

BMW’s push comes as companies across the economy increasingly turn to AI while workers grow more concerned about job security and corporate restructuring. The mean probability Americans assigned to unemployment being higher a year from now rose to 44.4% in August, up 1.6 percentage points from July and the highest reading since April 2020, according to the Federal Reserve Bank of New York. Major companies have also increasingly linked restructuring and workforce reductions to AI-driven efficiency, although evidence that AI alone is already causing widespread layoffs remains mixed.

Meta, for example, was planning layoffs that could affect 20% or more of its workforce as the company sought to offset enormous AI infrastructure spending and prepare for greater productivity from AI-assisted employees, Reuters reported in March.

BMW’s overhaul extends beyond AI. The company plans to reduce the number of vehicle variants, tailor production more closely to individual markets and focus on models capable of generating higher margins. It will not develop a successor to models including the BMW 2 Series Active Tourer and is considering a new luxury SUV above the X7 specifically for the U.S. market.

The automaker is also reshaping its strategy in China, where it plans to expand local production and increase the share of locally manufactured vehicles designed specifically around Chinese preferences to at least 95% by 2030. BMW is also considering exporting China-made vehicles to Southeast Asian markets.

BMW is aiming to rebuild its automotive operating margin to between 3% and 5% by 2028 before returning to its longer-term target of 8% to 10% by the start of the next decade. The company is also targeting at least 7 billion euros in automotive free cash flow by then.

BMW’s automotive margin stood at roughly 2.3% in its latest results, while a broader restructuring program is expected to eliminate approximately 8,000 jobs in Germany, Reuters reported.

“Our global business model remains the foundation of our success,” BMW Chairman Milan Nedeljković said. “At the same time, we are improving our structures and cost base so we can meet the increasingly fierce competition that will define this industry in the coming years.”