(Reuters) – Mercedes-Benz is cutting jobs in China to achieve its goal of reducing by a quarter workforce costs in its biggest market by 2027, a person with direct knowledge of the matter said.
The German luxury carmaker announced further cost-cutting globally as it warned last week that 2025 earnings would be significantly lower amid bruising price competition in China and rising global trade tensions.
Mercedes told staff at its sales and finance subsidiaries in China on Tuesday that it would let go about 10% to 15% of employees in these units, said the source, declining to be named as the person is not authorised to speak to media.
The company is also planning similar job cuts at other functional departments such as IT service and legal teams later this year, said the source.
It has around 5,000 employees in China including 2,000 in the research and development division, which will not be impacted by the staff reduction, the person said.
Mercedes did not immediately reply to a request for comment.
However, Mercedes is doubling down on China, planning more partnerships with local suppliers to improve the competitiveness of its products, the person added.
It said last week it would localise more production in China and the United States to protect itself from rising trade tensions between the world’s two biggest economies.
In China, the company, along with many other established foreign automakers, took a battering in sales in recent years, as they lost out to local rivals such as BYD in the hypercompetitive electric vehicle and hybrid segment.
(Reporting by Zhang Yan in Shanghai and Surbhi Misra in Bengaluru; Editing by Savio D’Souza, Miyoung Kim and Emelia Sithole-Matarise)
