Mumbai: Luxury carmaker Bayerische Motoren Werke AG (BMW) is targeting €6 billion ($8.5 billion) in expenditure cuts by 2012 to increase profitability and compete with DaimlerChrysler AG''s Mercedes Car Group.

The automotive division has set a goal of achieving a 26 per cent return on capital employed by 2012.
BMW plans to reduce costs across its three brands, boost productivity by 5 per cent annually even as chief financial officer Stefan Krause and sales chief Michael Ganal swap positions. The carmaker also plans to increase its dividend "substantially."

BMW''s net income fell 4.3 per cent to €753 million in the second quarter as earnings at Stuttgart, Germany-based Mercedes almost doubled to 1.2 billion euros.