BMW Doubles Down on German Production
BMW’s investment in German factories sits alongside overseas localization, lower production costs, and cuts outside the factory floor—a combination that helps explain its resilience at home
BMW is betting on German local production as others are reducing their German manufacturing footprint. The company has invested about two billion euros in vehicle production at Munich and Dingolfing and battery manufacturing at the new Irlbach-Straßkirchen plant.
The surprise is the timing. BMW is making this bet on Germany while it cuts 8,000 jobs and its rivals shrink their German factories.
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The same company is also shrinking. BMW will offer voluntary redundancy to about 40,000 of its 85,000 permanent German employees from this month, aiming to cut 8,000 jobs by the end of 2027. Production line workers are spared. The cuts fall on office and administrative staff.
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It thinks it has too many layers of management and takes too long to develop cars.
BMW management outlined the approach and reasoning behind its operating model changes in and alongside its Q2 earnings call.
BMW says the i3 production launch has further reduced Plant Munich manufacturing costs by 10%.
While German car production fell 10 per cent in 2025 from pre-pandemic levels, BMW saw a 6 per cent increase, helped by its decision to bring production of the Mini Countryman, the X1 and some 5 Series models in-house from partners in the Netherlands and Austria.
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The group’s current position owes much to decisions taken years ago, including producing a higher share of its vehicles sold in China and the US locally. As a consequence, German factories are less affected by falling sales in Asia and the impact of Donald Trump’s tariffs.
BMW also embraced electric cars earlier than its German rivals, launching the first i3 in 2013. The model was a commercial flop but taught BMW important lessons about the risks of dedicated EV production.
This is an example of localized manufacturing and domestic investment reinforcing one another: FT indicates that local production in China and the U.S. reduces German plants’ exposure to weaker Chinese demand and U.S. tariffs, while modernization and in-sourcing support home-country competitiveness and utilization.