Bayerische Motoren Werke AG, more commonly known as BMW, announced its plans to scale down its workforce as the company puts into practice its latest strategy that would increase its profit with $8.6 billion (6 billion euros) in spending cuts.

The world’s largest luxury car manufacturer said the jobs will be cut by not replacing people who leave and through contract agreements on work-time flexibility, according to Mathias Schmidt, a spokesman at Munich-based BMW.

However, Schmidt refused to confirm a report in today’s online edition of German magazine Der Spiegel which wrote that BMW intends to cut 8,000 positions next year. BMW would only say on Friday that it was likely to cut thousands of jobs, starting next year.

Norbert Reithofer, BMW’s CEO, outlined the five-year savings program in September after the company profitability lost ground to Daimler AG's Mercedes-Benz Cars division. Reithofer added that BMW’s goal is to raise by 2012 its return on capital employed to 26 percent from 22 percent last year and also reach a return on sales of 8 percent to 10 percent, compared to 5.9 percent.

“BMW is under a lot of pressure from the capital markets as well as their majority owner, the Quandt family, to become more profitable and efficient,'' said Gregor Claussen, analyst at SEB in Frankfurt for Bloomberg. He advised investors to buy BMW shares.

“With this kind of move they are showing the market that they are serious and doing something about their situation,'' he added. 
BMW shares rose as much as 1.18 euros, or 2.9 percent, to 41.59 euros and were up 2.7 percent at 41.51 euros as of 12:41 p.m. in Frankfurt. The stock has declined 4.6 percent this year.