German luxury automaker BMW is targeting an automotive operating margin of 3% to 5% by 2028 as it seeks to recover from weak demand in China, rising competition and trade pressures, according to Reuters.
The Munich-based company outlined a restructuring strategy that includes reducing the number of divisions and management-related roles by 20% by mid-2027. A previously announced redundancy program is expected to affect about 8,000 jobs in Germany.
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BMW’s automotive margin stood at 2.3% in its latest results. The company aims to eventually restore margins to 8% to 10% by the early 2030s, with automotive free cash flow targeted at more than €7 billion, or approximately $8 billion.
Artificial intelligence will play a larger role across BMW’s operations, including vehicle development, purchasing, sales and aftersales, as the company looks to streamline decision-making and improve efficiency.
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The automaker is also changing its regional strategy. BMW plans a new entry-level electric vehicle for Europe in 2028 and a new luxury SUV positioned above the X7 for the U.S. market. In China, it plans to increase local production and tailor at least 95% of locally manufactured vehicles to Chinese customer preferences by 2030.
The strategy comes after BMW issued its third profit warning linked to weakness in China in just over three years. The company has also seen its shares fall by more than a third over the past year, according to Reuters.