Mercedes-Benz plans workforce cuts in China by 2027

Mercedes-Benz might be the next German automaker to lose out in the Chinese market. According to a recent Reuters report from an anonymous source, Mercedes-Benz China aims to cut its workforce costs by 25% and eliminate 10-15% of sales and finance jobs by 2027.

On the flip side, the 2,000 people in the research and development department will keep their jobs, so Mercedes-Benz still wants to create China-oriented models in the future.

This news comes simultaneously with the company’s announcement that it would be cutting costs globally in anticipation of lower 2025 earnings.

MBUSA x Tesla Supercharger NetworkMercedes-Benz

Perhaps the situation isn’t as bad

There is also the possibility that the anonymous source was mistaken. A spokesperson for Mercedes-Benz China did not comment on the 10-15% job cuts, but claimed they would not reduce costs for office-based roles by 25%. The same spokesperson also claimed Mercedes-Benz plans to form further partnerships with local, albeit unnamed, suppliers to remain competitive in China.

CFO Harald Wilhelm praised the company’s BBAC joint venture with state-owned BAIC Motors as bringing a return on sales in 2024 of 15%. To retain those figures, the two plan to slash material costs by over 10% and production costs by over 20%.

China is still ahead

This is nowhere near the first time we’ve heard of the Chinese automotive industry’s potential domination over traditional automakers. The Xiaomi SU7 recently outsold the Tesla Model 3 despite being in its first year of production. Toyota also showed signs of struggling, with stagnant sales and declining production in October. Even GM announced a $5 billion hit to its profits last year as part of a restructuring effort to address its faltering operations in China.

Of course, we can’t forget that many, if not most, of the automotive ventures in China are owned by the government and thus receive plenty of monetary support. That is how they can afford to sell such technologically-advanced cars for thousands of dollars less than their foreign competitors. It’s not exactly a fair game.

2024 Mercedes-Benz E450 wagonMercedes-Benz

Final thoughts

While Mercedes-Benz may be looking to cut costs in China, that doesn’t mean the German automaker’s future there is bleak. With a heavy focus on adapting its models to better serve the Chinese market, it’s clear that Mercedes-Benz still wants to have some kind of foothold in the land of BYD.

Hopefully, the workers who will be laid off can easily find other jobs in the industry. Wouldn’t it be ironic if they were hired by a Chinese competitor?

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