Mercedes-Benz to Cut 15% of Workforce Amid Financial Struggles

Mercedes-Benz has announced a 15% workforce reduction in China, impacting employees in sales and automotive finance sectors. This decision follows a series of financial challenges, as the company reported a 4% decline in total revenue for 2024, amounting to €145.59 billion. The EBIT fell sharply by 31%, and net profit decreased by 28.4%, primarily due to a drop in sales and pricing pressures.

Affected employees will receive a compensation package of N+9, meaning they will receive their current salary plus nine additional months of pay. If they do not secure new employment within two months, they will also receive their salaries for March and April. This round of layoffs reportedly includes a significant number of employees on permanent contracts.

In response to rumors of large-scale layoffs, Mercedes-Benz issued a statement affirming that the restructuring is necessary for business efficiency. The company plans to integrate new digital technologies to streamline operations and reduce redundant positions.

Looking ahead, Mercedes-Benz aims to reduce costs by €5 billion by 2027, part of a broader initiative that may lead to the elimination of up to 20,000 jobs globally. The automaker is also focusing on closing inefficient factories and optimizing its supply chain to enhance profitability.

Despite these challenges, China remains a crucial market for Mercedes-Benz, with plans to introduce more than 30 new models by 2027, including exclusive vehicles tailored for Chinese consumers. The company is betting on local research and development to maintain its competitive edge in this vital market.