Mercedes-Benz is exploring the potential sale of its car-leasing unit Athlon as part of a broader operational review, reported Bloomberg citing people familiar with the matter. 

The luxury car manufacturer has approached potential buyers to gauge interest in a deal.

However, the people said that the discussions are still at an early stage and may not necessarily lead to a transaction.

In 2016, Mercedes-Benz acquired Athlon from Dutch lender Rabobank for around €1.1bn, with plans to merge it into the carmaker's fleet management unit.

Car-leasing businesses are currently facing challenges due to the rise of electric vehicles (EV), which complicates the prediction of residual values.

This issue has also affected Ayvens, a car-leasing firm owned by Societe Generale.

Mercedes-Benz is contending with weaker margins , influenced by softening demand in the critical Chinese market and sluggish growth in Europe. There are also concerns about potential tariffs from the US, the report said.

In November, reports emerged that Mercedes-Benz is planning to cut multi-billion euros in costs in response to a deteriorating business environment.

The German automotive industry is facing several challenges, including the transition to EV and increased competition in China.

In response to these challenges and the volatile global economic situation, Mercedes-Benz has justified its cost-saving measures.

Recently, Reuters reported that Mercedes-Benz is planning to broaden its reach in India by opening an additional 20 dealerships or service outlets in 2025 with focus on smaller cities.