Mercedes-Benz to resume voluntary redundancy program in Germany — Asharq Al-Awsat

Mercedes-Benz will resume its voluntary employee redundancy program in Germany in December. The company is also discussing further cost reductions with trade unions, Asharq Al-Awsat reports, citing CEO Ola Källenius.

Cost reductions in Germany

Källenius said that Germany accounts for about 15% of Mercedes-Benz sales, while two-thirds of the company’s employees and structures are based in the country. According to him, the program is being resumed to further reduce fixed costs.

He did not specify the number of jobs that could be cut, as negotiations with trade unions are ongoing. He noted that Mercedes-Benz intends to adapt the company’s structure to its current revenue level.

Källenius also said that labor costs in China, Hungary, Romania and the United States are lower than in Germany.

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Pressure from the Chinese market

German automakers are facing intense competition and declining demand in China, the world’s largest car market. Mercedes-Benz became the third major German manufacturer after Volkswagen and BMW to issue a warning about annual profit because of difficulties in the Chinese market.

Mercedes-Benz’s net profit in the third quarter rose by nearly 30% to 1.52 billion euros, although total sales fell by 4.5% to 30.7 billion euros. The source notes that the decline in sales was largely the result of a collapse in the Chinese market.

Källenius stressed that Mercedes-Benz cannot leave China, where price competition has intensified due to the presence of more than 100 automakers. BMW plans to cut 8,000 jobs by the end of 2027 as part of its own voluntary redundancy program, while Volkswagen Group, which includes Porsche and Audi, expects to cut 120,000 jobs worldwide by the end of the decade.