According to a report by the German newspaper 'Handelsblatt' on October 22, BMW stopped accepting new applications for its voluntary employee separation compensation program less than two weeks after the number of applicants reached the planned target. BMW confirmed that it had achieved this goal ahead of schedule, but refused to disclose the exact number of applicants. It is expected that by mid-November, employees who have applied will be informed whether they can sign a separation agreement with the company.
BMW Munich Headquarters DPA
Since October 8th, thousands of BMW employees have expressed their desire to leave the company. An important factor that attracts them is the high compensation offered by the company, as well as a series of additional benefits after leaving the job. An internal resignation agreement previously disclosed by the Business Journal indicates that the compensation for some employees may exceed 650,000 euros (approximately 5.4 million RMB).
In addition to cash compensation, some employees also enjoy additional benefits. For example, eligible employees can purchase their own official vehicles, and some senior employees even have the opportunity to buy a second vehicle. Moreover, some employees who are 55 years old or above can enjoy similar car purchase incentives as BMW retirees after leaving their jobs. BMW also offers an early departure incentive: employees can choose to leave by March 31 or October 31, 2027, and those choosing the earlier date will receive an additional bonus.
German media also reported that this early departure bonus is not unique to the automotive industry. The compensation amount is determined by factors such as the employee's income, age, and length of service. However, BMW has not disclosed a uniform calculation formula for this compensation. In comparison, the individual compensation amounts in Volkswagen's previous compensation plan were around 404,700 euros (approximately 3.035 million RMB), while the compensation received by some senior team leaders at Mercedes-Benz was about 500,000 euros (approximately 3.75 million RMB). These amounts are lower than those offered by BMW.
German broadcaster BR24 previously reported that due to the high compensation, the BMW severance program led to a rapid increase in the number of employee consultations and applications.
The German newspaper Süddeutsche Zeitung reported on October 15th that after BMW sent individual compensation packages to approximately 40,000 employees, the process had to be slowed down due to an excessive number of applicants about a week later. Initially, employees could not access their individual compensation packages through the company's internal HR portal due to heavy traffic, causing the system to malfunction. Additionally, handling a large number of resignation requests also put pressure on the HR department: once employees accepted the compensation packages, the company was required to conduct further negotiations with them and finalize the resignation agreements, rather than allowing employees to leave simply by clicking a confirmation button.
The Frankfurt Review further evaluated the costs of BMW’s layoffs, estimating that this plan will result in a one-time cost of several hundred million euros.
It should be noted, however, that applying to end the employment relationship in advance does not guarantee that the employee will indeed leave the company. BMW follows a principle of mutual consent; if an employee wishes to leave, the company must agree to sign the agreement. According to the current arrangements, BMW will complete the relevant screenings and negotiations by mid-November, but not all applicants will be approved.
BMW Germany Dingfeng Factory, Official BMW Group Website
This layoff plan is part of BMW’s efforts to cut costs and adjust its organizational structure. According to the Commercial News, BMW plans to reduce around 8,000 jobs by the end of 2027, and it expects that the new organizational structure will save approximately 1 billion euros (about 8.3 billion yuan) each year starting from 2028. The compensation plan is primarily aimed at indirect departments, those positions not involved in production, including administration and research and development departments. Positions directly involved in production are not covered by this plan. BMW also plans to reduce the number of senior management staff by 20%.
BMW officially announced its layoff plan at the end of July. Previously, Nidalovic, who had been in office for only a month, issued a profit warning in mid-June. German media cited the weak performance in the Chinese market as one of the important factors affecting BMW's results. As competition in the Chinese automotive market intensifies, BMW is also seeking to improve its operating performance through organizational streamlining and cost control.
From the current progress, the early achievement of the resignation requests indicates that BMW has received strong employee response to its voluntary resignation program. However, the short-term costs associated with high compensation, the negotiations regarding specific resignation agreements, and whether the annual cost savings of 1 billion euros can be achieved after the personnel adjustments remain matters that require further observation.
