BMW struggling to persuade employees to leave as it eyes 5,000 job cuts

By BLOOMBERG | 1 June 2020

MUNICH: BMW AG is negotiating with unions about giving more incentives to workers to persuade them to leave, helping the carmaker reach a target of eliminating about 5,000 positions.

The German firm has been unable to meet its headcount-reduction goal with existing measures, chief financial officer Nicolas Peter said in an internal posting confirmed by the company. Those have included placing employees on unpaid leave and reducing working hours for those on shorter contracts.

The German company could add early retirement packages to the list, a spokesman said last Friday. German newswire DPA was first to report the accelerated measures.

While BMW typically loses and replaces about 5,000 employees every year due to natural comings and goings, uncertainty caused by the coronavirus pandemic has slowed the outflow as people put off plans to seek other jobs or to start their own businesses.

The Covid-19 outbreak has made it tough for carmakers to sell vehicles as government measures to contain the virus caused showrooms to close and slowed production to a crawl.

Weak consumer demand has dashed any chance of a swift recovery, and companies have moved to reduce costs. Renault SA said it plans to eliminate 14,600 jobs worldwide.

German automakers had hoped for help in the form of state car-buying incentives to stimulate demand, but were left frustrated when chancellor Angela Merkel postponed a planned summit to discuss an incentive programme.

BMW shut most of its factories in April, before restarting them earlier this month. Second-quarter sales are expected to be worse than in the first three months of the year, the automaker has said, when they fell 6.4%.

The company lowered its 2020 profit-margin guidance earlier this month, and said it no longer expects to achieve positive free cash flow.