This comes as Mercedes-Benz China aims to apparently decrease office-based workforce costs by 25% by 2027.
Mercedes-Benz is currently set to implement significant workforce reductions in China, with it apparently set to let go of 10-15% of its sales and finance team. This comes as the German luxury marque plans to cut costs for office-based roles in the world’s biggest auto market by a quarter by 2027, according to an insider with direct knowledge of the situation.
It is nevertheless worth highlighting that the approximately 2,000 research and development employees at Mercedes-Benz China will remain unaffected by this recent corporate downsizing, highlighting the company’s strategic focus on adapting its product offerings to the competitive Chinese market.
This round of job cuts in China comes amid the German luxury automaker pursuit of global cost-cutting measures, as it recently cautioned investors that 2025 earnings would significantly decrease compared to previous performance. Despite these reductions, Mercedes-Benz intends to maintain substantial investments in China to defend and expand its market share against increasing competition from domestic electric vehicle manufacturers that are challenging the traditional dominance of German automakers.
Mercedes-Benz previously experienced a 3% decline in car sales last year, delivering 1.98 million vehicles globally. This downturn was primarily driven by weakening demand in China, the company’s largest market, where sales dropped 7% to 683,600 units. Chinese consumers are increasingly choosing local brands over premium Mercedes models like the S-Class and Maybach.
While Mercedes-Benz China, which employs approximately 5,000 people, has not confirmed the sales and finance workforce reductions, a spokesperson disputed the reported 25% cost reduction target for office-based roles without providing alternative figures. According to the source, the automaker is pursuing additional partnerships with local suppliers to enhance product competitiveness, though the cost-cutting objectives may adjust based on market developments.
During a recent investor conference, CFO Harald Wilhelm revealed that the Beijing Benz Automotive Co. (BBAC) joint venture with state-owned BAIC Motors, which manages Mercedes’ production workforce in China, aims to reduce material costs by over 10% and production costs by more than 20%. Wilhelm described the joint venture as “damn healthy” with a 15% return on sales in 2024, emphasising that the cost-cutting program is designed to “rightsize” operations while maintaining these margins.
Wilhelm also indicated that Mercedes-Benz plans to increase local production in both China and the United States as a strategic response to growing trade tensions between these major economic powers.
