German luxury carmaker Mercedes-Benz has officially announced that it will be implementing job cuts in China, following recent rumors circulating in the media. The company stated that Mercedes-Benz China will be consolidating and eliminating redundant positions within the organization, a move that will inevitably result in some staff reductions. This decision comes as Mercedes-Benz seeks to navigate a challenging market environment and capitalize on transformational opportunities within the automotive industry.
In response to the need for operational efficiency and enhanced market competitiveness, Mercedes-Benz has been actively restructuring its business operations. This restructuring includes optimizing business processes and streamlining organizational structures to ensure the company’s continued resilience in the face of evolving market dynamics.
Recent reports from local media outlet AutoPix suggested that Mercedes-Benz China had initiated layoffs on February 26, with approximately 15 percent of the workforce being affected. The layoffs primarily targeted employees in the sales and auto finance departments, while the research and development division remained unaffected for the time being. According to AutoPix, laid-off employees will receive compensation equivalent to N+9 months’ salary, with N representing the number of years they have worked at Mercedes-Benz.
Mercedes-Benz has clarified that it is not offering N+9 compensation as reported, but is committed to providing a fair and reasonable compensation package to affected employees. The company emphasized its responsibility towards its workforce and expressed its intention to support the affected employees during this transition period.
The decision to implement job cuts in China comes amidst Mercedes-Benz’s recently released earnings report for fiscal year 2024. The report indicated a decline in revenues to €145.6 billion ($152.5 billion), down 4.46 percent year-on-year, with earnings before interest and taxes (EBIT) amounting to €13.6 billion, a decrease of 30.96 percent year-on-year.
It is worth noting that the compensation package offered by Mercedes-Benz to laid-off employees is considered generous compared to similar actions taken by other foreign car companies in the past. The company’s commitment to supporting its workforce during this challenging period reflects its dedication to responsible corporate practices and employee welfare.
As Mercedes-Benz navigates through this period of restructuring and organizational realignment, it remains focused on enhancing its operational efficiency and market competitiveness in China. The company’s proactive approach to adapting to market changes and transforming its business operations underscores its commitment to sustainable growth and long-term success in the automotive industry.
