HAMBURG -- BMW management and labor have reached an agreement on measures to reduce costs that avoids "drastic measures," the automaker said on Wednesday.
The agreement involves reducing bonuses for workers based on company profits, as well changes to Christmas and other bonuses for some workers. The measures are effective starting 2020.
If applied to last year’s payouts, the bonus payments would have been nearly 20 percent lower.
BMW had been in talks with labor representatives and its top suppliers as it seeks to achieve cost savings of more than 12 billion euros ($13 billion) by 2022.
"We have achieved a solution based on solidarity. This allows us to avoid drastic measures that others are currently taking to reduce their costs," CEO Oliver Zipse said.
German automakers are intensifying their efforts to reduce costs to fund investments for electric cars and autonomous vehicle technologies.
European Union emissions reduction regulations will become much tougher and will be almost impossible to meet without sizable sales of electric vehicles, which have so far met with limited interest from consumers.
Trade wars and softening demand in major markets such as China has made navigating the transition even more fraught.
Under Zipse, BMW’s third-quarter results showed signs of improvement. Its automotive profit margin increased to 6.6 percent from 4.4 percent a year ago -- well below its target range of between 8 percent and 10 percent.
Audi said on Tuesday that it plans to cut about 15 percent of its German workforce to protect its profitability.
Daimler as well as suppliers Continental and Osram have also recently announced staff and cost cuts.
Bloomberg contributed to this report
