Mercedes refuses the looming potential of 20,000 job losses.
Mercedes-Benz, the automaker, is trying to save billions of euros, mainly due to its struggling Chinese division. According to a report, over 20,000 jobs might be on the line, but the company denies this claim. As per a report in "Manager Magazin", Mercedes aims to save around 5 billion euros by 2027, half of which they plan to achieve by 2025. The company spokesperson did not comment on the figures, citing their plans to lower costs significantly in the coming years. However, they declined to provide any specific details.
The company attributes the need for cost-cutting to the volatile global economic situation. They believe that by improving efficiency, they can stay financially strong and adaptable.
Despite the report of potential job losses, the spokesperson dismissed the claim, stating there are no plans to close German plants. They also emphasized that employment security, which applies to most German employees, is not under discussion. This commitment, known internally as "Zusi 2030", rules out layoffs due to operational reasons until 2029.
Ways to reduce workforce indirectly
Mercedes has the option to leave vacant positions unfilled. Mercedes CEO Ola Källenius told the "Süddeutschen Zeitung" that they have traditionally handled demographics, employee turnover, and restructuring by offering severance packages rather than imposing direct cuts. He said, "We don't come with the lawnmower and say we're making minus X percent. We turn every stone and improve our structures."
In October, Mercedes reported a significant drop in profits for the third quarter. Their net result fell by over half to 1.72 billion euros compared to the previous year, and their revenue decreased by 6.7% to 34.5 billion euros. These results fell short of their expectations, Finance Chief Harald Wilhelm mentioned at the time. In response, they announced they would concentrate more on controlling costs and improving efficiency.
Mercedes is currently facing challenges, especially in China. Luxury models bearing the star are not selling as well as anticipated at the moment, and there's no sign of improvement this year. However, these high-end cars are the backbone of CEO Ola Källenius' strategy, which has delivered record figures for the company recently. Unfortunately, wealthy Mercedes customers in China have become less extravagant due to the economic downturn. Moreover, competition from local car manufacturers in the country, which had previously served as a growth guarantee for German manufacturers, is intensifying.
The volatile global economic situation has led Mercedes-Benz to attribute the need for cost-cutting, aiming to save around 5 billion euros by 2027, with half of it achieved by 2025. To reduce the workforce indirectly, Mercedes CEO Ola Källenius stated that they handle demographics, employee turnover, and restructuring by offering severance packages rather than imposing direct cuts.
Despite challenging times in China, where luxury Mercedes models are not selling as well as anticipated, and wealthy customers have become less extravagant due to the economic downturn, Mercedes-Benz is focusing on controlling costs and improving efficiency to stay financially strong and adaptable.
