(Reuters) – Mercedes-Benz is cutting 10-15% of sales and finance jobs in China and plans to reduce costs for office-based roles by a quarter in the country by 2027, a person with direct knowledge of the matter said.
The roughly 2,000 people working in research and development at Mercedes-Benz China will be unaffected by the cuts, the source added, in a sign that the carmaker is focusing heavily on adapting its products to the Chinese market where it faces a growing pool of domestic rivals.
The German luxury carmaker is cutting costs globally and warned last week that 2025 earnings would fall sharply from last year.
Still, the company plans to spend heavily in China in coming years to protect and grow its market share in the country, where new EV-only competitors are swiping up market share from the German carmakers which long dominated sales.
A spokesperson for Mercedes-Benz China which employs around 5,000 people, did not comment on plans to cut the sales and finance workforce by 10-15% but said the figure to reduce costs for office-based roles by 25% was incorrect, without elaborating.
Mercedes-Benz plans more partnerships with local suppliers to improve the competitiveness of its products, the person added, declining to be named as they were not authorised to speak to media. The cost-cutting targets could change depending on how the market develops, the person with direct knowledge of the matter said.
CFO Harald Wilhelm told investors at the company’s results conference earlier this month that the carmaker’s BBAC joint venture with state-owned BAIC Motors, which employs its production workers in China, planned to slash material costs by over 10% and production costs by over 20%, without mentioning personnel.
Wilhelm described the joint venture as “damn healthy” with a return on sales in 2024 of 15%, and said the cost-cutting programme intended to “rightsize” its operations to retain those margins.
He also said the carmaker will localise more production in China and the United States to protect itself from rising trade tensions between the world’s two biggest economies.
(Reporting by Zhang Yan in Shanghai and Surbhi Misra in Bengaluru; Writing by Victoria Waldersee; Editing by Savio D’Souza, Miyoung Kim, Emelia Sithole-Matarise and Susan Fenton)
