Mercedes-Benz has reached an agreement with its works council to initiate staff buy-outs and halve planned salary increases, marking a significant move in the company’s cost-cutting efforts, reported Reuters.
This decision comes as the automaker strives to boost its financial performance amidst a challenging industry landscape.
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The company has not disclosed the number of jobs it aims to cut but has assured that production workers will not be affected and that redundancies are off the table.
Management has committed to a job security guarantee until the end of 2034.
Mercedes-Benz CFO Harald Wilhelm, at the annual results conference last month, outlined plans to outsource functions ranging from finance and human resources to procurement, aiming to reduce the workforce size through natural attrition and voluntary redundancies.
By 2027, Mercedes-Benz aims to slash production costs by 10%, with a goal to double this reduction by 2030.
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By GlobalDataThis initiative builds on an existing initiative that began in 2020, aiming to cut costs by 20% between 2019 and 2025.
The European auto industry, including carmakers and component manufacturers, is facing numerous challenges this year, leading to widespread cost-cutting measures and strong resistance from Germany’s influential unions, the report said.
Furthermore, 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 impacted by these reductions.
For the full year of 2024, Mercedes-Benz Group reported a revenue of €145.6bn ($151.9bn), a 4.5% decrease from the €152.4bn recorded in 2023.
The net profit for 2024 also experienced a downturn, settling at €10.4bn, down from €14.5bn in the previous year.
