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BMW warns on profits as it counts cost of plan for 8,000 job cuts
BMW has cut its forecast for this year’s profit margin to between -0.5% and 0.5%, its second downgrade in a year. It says restructuring costs, including 8,000 planned job cuts in Germany, are adding to pressure from Chinese competition and weaker sales in China.
Third-quarter revenue fell 6% to €30.4bn, while pre-tax earnings dropped 11% to €2.1bn. Sales in China were down 22% in the first nine months; BMW said this reflected the wider market downturn. Its core car business had a 3.4% operating margin, or more than 2% excluding restructuring charges, and the company is accelerating management cuts as it launches its new electric vehicle range in China.
In short
- BMW expects its annual profit margin to fall to between -0.5% and 0.5%.
- Restructuring includes 8,000 planned job cuts in Germany.
- China sales fell 22% in the first nine months of the year.
Steelman: both sides, in good faith
The strongest fair case each way — we don't pick a winner.
The case for
BMW can argue that restructuring, including job cuts, is necessary to bring costs into line with falling sales and tougher competition, particularly in China. Reducing management layers and preparing for a new electric vehicle range may help the company remain competitive and protect its longer-term viability, even as the changes weigh on near-term profits.
The case against
Employees and critics can argue that cutting 8,000 jobs imposes serious costs on workers and communities, while the reported figures do not by themselves show that such large reductions are necessary or will restore competitiveness. They may favour alternatives that retain skilled staff and share the burden, especially as BMW continues to launch new vehicles and its core car business remains profitable before restructuring charges.
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