Mercedes-Benz has recently come to an agreement with its works council to implement staff buy-outs and reduce planned salary increases by half. This move is a significant step in the company’s efforts to cut costs and improve its financial performance in a challenging industry landscape.
The automaker has not disclosed the exact number of jobs that will be affected by these measures, but it has assured that production workers will not be impacted and that redundancies are not on the table. Management has also committed to a job security guarantee until the end of 2034.
During the annual results conference, Mercedes-Benz CFO Harald Wilhelm outlined plans to outsource functions such as finance, human resources, and procurement, with the aim of reducing the workforce size through natural attrition and voluntary redundancies. The company aims to slash production costs by 10% by 2027, with a goal to double this reduction by 2030.
This cost-cutting initiative builds on a previous effort that began in 2020, with the goal of reducing costs by 20% between 2019 and 2025. The European auto industry, including carmakers and component manufacturers, is facing significant challenges this year, leading to widespread cost-cutting measures and resistance from Germany’s influential unions.
Additionally, Mercedes-Benz is looking to reduce its office-related expenses in China by 25% by 2027, which includes cutting 10-15% of sales and finance positions. However, the 2,000 employees in research and development at Mercedes-Benz China will not be affected by these reductions.
In terms of financial performance, Mercedes-Benz Group reported a revenue of €145.6 billion ($151.9 billion) for the full year of 2024, a 4.5% decrease from the previous year. The net profit for 2024 also experienced a downturn, settling at €10.4 billion, down from €14.5 billion in the previous year.
Overall, these cost-cutting measures and strategic initiatives are part of Mercedes-Benz’s long-term plan to enhance its financial performance and adapt to the evolving automotive industry landscape. By streamlining operations and reducing expenses, the company aims to strengthen its position in the market and ensure long-term sustainability.
