Yahoo Finance BMW to cut 6,000 jobs as part of cost-saving push
German premium carmaker BMW (BMW.DE) confirmed it will cut 6,000 jobs in Germany in an effort to cut costs, as the automotive sector struggles to recover from the coronavirus lockdowns and low demand for new cars.
German business daily Handelsblatt reported that BMW management and its works council agreed the workforce reduction will be achieved via a mixture of redundancies, early retirement, not renewing temporary contracts and not refilling vacancies. It is the first time BMW has had to downsize since the 2008 financial crisis.
BMW had said last year that it planned to cut 6,000 jobs by 2022.
The Bavarian automaker, which employs 126,000 people globally, had put some 34,000 staff onto short-hours work as production came to a halt in March after plants were forced to close as part of the nationwide shutdown to contain the spread of COVID-19.
However, BMW, like its rivals VW (VOW3.DE) and Daimler, (DAI.DE) began slowly ramping up production again in the middle of May. The challenge they face now is that car sales have collapsed as customers avoid big-ticket purchases in uncertain times.
Volkswagen-owned Audi announced in November 2019 that it will cut 9,500 jobs in Germany up until 2025, as part of overhaul of the company. Daimler is also planning big job cuts of up to 15,000.
New car registrations across the European Union as a whole plunged by over 52% in May from the same month in 2019. That was a slight improvement from the 73% drop in April, but no consolation to carmakers desperate to get their production lines running at full capacity again.
READ MORE: New car sales in the European Union plunge over 50% in May
According to the German Automotive Industry Association, only 1.18 million cars were produced between January and May, a drop of 44%, or nearly a million vehicles from the same five-month period in 2019.
Ferdinand Dudenhöffer, director of the Center for Automotive Research in Germany, said this week that key global car markets won’t recover for several years, which will stifle German car production and could mean the loss of 100,000 jobs across automotive and supplier companies in the country in the next three-to-four years.
