Mercedes To Cut More Jobs As Chinese Competition Bites

Premium German carmaker Mercedes-Benz will restart a voluntary redundancy programme and is in discussion with unions over further cost-cuts, its chief executive Ola Kaellenius said Wednesday after the firm warned on full-year profits.

“Germany accounts for roughly 15 percent of our sales, but two-thirds of our employees and structures are based here,” Kaellenius told reporters and investors on an earnings call to present third-quarter results.

“To reduce our fixed costs further, we have decided to restart the severance programme in Germany in December,” he added, without giving a target number of job cuts.

German carmakers have struggled with cutthroat competition and falling demand in China, the world’s largest car market, leading to painful adjustments at home.

Mercedes-Benz on Tuesday became the third of the big three German carmakers — alongside Volkswagen and BMW — to have issued a profit warning for the year, citing difficulties in China.

BMW aims to cut 8,000 jobs by the end of 2027 with its own voluntary redundancy programme, and the Volkswagen Group plans to have cut 120,000 jobs globally by the end of the decade across its brands, which include Porsche and Audi.

Kaellenius said Mercedes-Benz could not give more detail since discussions were ongoing, adding that he was nevertheless pressing hard to get costs down.

“We will continue with determination to adjust the structures of the company to fit the revenue position of the company,” he said.

Labour costs in China, Hungary, Romania and the United States are all lower than in Germany, Kaellenius said, adding that “eastern Europe as a whole is open to any industrialist looking to expand”.

Net profit for the third quarter rose almost 30 percent to 1.52 billion euros ($1.69 billion) even as overall sales declined 4.5 percent to 30.7 billion euros, largely the result of a collapse in China.

But Kaellenius said the company could not afford to abandon the Chinese market despite an intense price war driven by over 100 competing carmakers.

“If you’re a global car company like Mercedes, there’s not a play where you put China aside,” he said.

AFP