BMW is moving faster than expected with its plans to cut jobs in Germany. The automaker closed its voluntary severance program ahead of schedule after thousands of employees expressed interest in leaving, suggesting the generous payouts struck a chord with workers.

The program opened to employees early this month, but BMW confirmed on October 20 that it had already reached its target and would no longer accept new applications. The company plans to inform interested employees by mid-November whether it will agree to their departure. Not everyone who signed up will necessarily receive a severance agreement, as both sides must agree to the terms.

BMW hasn’t disclosed how many employees have applied. However, reports suggest that around 5,000 workers may have expressed interest, based on the company’s broader plan to eliminate approximately 8,000 positions worldwide, with more than half of those cuts expected in Germany.

Generous Payouts Prove Hard To Resist

Some employees may have found the offers difficult to ignore. According to Handelsblatt, individual severance packages can exceed €650,000, with many reportedly reaching well into six figures. BMW has set aside roughly €1 billion for the program, which targets employees in indirect roles such as administration and development. Production workers are excluded.

The strong response isn’t entirely surprising given the reported terms. When BMW made the individual offers available in early October, demand briefly overwhelmed its systems as employees rushed to find out how much the company was willing to pay them to leave. The technical issues reportedly lasted only a few hours, but they offered a glimpse of the interest in the program.

The agreements reportedly include additional incentives for employees who leave earlier. Workers can choose between departure dates of March 31 and October 31, 2027, with those opting for the earlier date receiving a bonus. Some agreements also address company cars and additional benefits for long-serving employees.

BMW originally planned to complete the job cuts by the end of October 2027. However, closing the application window early doesn’t mean everyone will leave immediately. Some employees could remain with the company into next year before their employment officially ends.

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BMW Wants To Emerge Leaner By 2028

The initiative is part of a broader effort to cut costs as BMW faces mounting pressure from a weaker business in China, costly electrification investments, and intensifying competition.

BMW wants to eliminate around 8,000 positions worldwide by the end of 2027 and expects to save approximately €1 billion annually from 2028 through its restructuring efforts. The company is also streamlining its management structure. It’s slashing the number of divisions and associated senior vice president positions by 20% by mid-next year.

Unlike some competitors that have pursued more confrontational restructuring measures, BMW is relying on voluntary departures to reduce its workforce. This approach can be expensive upfront, especially when individual payouts reach hundreds of thousands of euros, but it lets the company reduce headcount without immediately resorting to compulsory redundancies.

The challenge will be ensuring enough employees leave without losing the expertise the company needs for its next generation of vehicles. BMW is investing heavily in Neue Klasse combustion-engine and electric cars and the technologies underpinning them, making experienced engineers and other specialists particularly valuable.

For now, the early closure suggests BMW has attracted enough interest to meet its initial target. Whether the company can translate those departures into lasting savings without compromising development and day-to-day operations remains to be seen. The real test begins when the upfront severance costs give way to the promised annual savings in 2028.

Source: Handelsblatt

First published by https://www.bmwblog.com