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Mercedes-Benz cuts production of EQS and S-Class
Mercedes-Benz is once again reducing the production of the luxury sedans EQS and S-Class and, according to a report, is reverting to single-shift operation. As early as 2023, the company had eliminated the night shift in the "Factory 56" in Sindelfingen near Stuttgart. Mercedes-Benz confirmed to the Handelsblatt that the production of the S-Class and the electric EQS will be converted from two-shift to single-shift operation in the fourth quarter of 2024.
In the "Factory 56," completely different models can be built on a single line
In the state-of-the-art "Factory 56," the EQS and the new S-Class, its long version, and the Maybach version of the S-Class have been built since 2021. The plant allows the assembly of different models and powertrains on a single line, as fundamentally, the EQS and S-Class do not even share the same platform, only small parts at most.
According to the Handelsblatt, the cuts are not expected to affect the core workforce of 1,500 employees in Factory 56, but temporary workers may have to fear for their future.
In an ideal scenario, EQS and S-Class were supposed to achieve over 100,000 units a year
This exacerbates the problems for Mercedes-Benz with the luxury sedans: the EQS, which was never a major volume seller, was facelifted as recently as April 2024 and received a better battery. According to Handelsblatt, Mercedes-Benz had once hoped for 50,000 units per year, but now it seems they won't even achieve half of that figure – partly due to declining sales in China, where orders for the traditional S-Class are also beginning to dwindle. Handelsblatt also has sales figures from Marklines and Dataforce: between January and June 2024, Mercedes-Benz sold 28,100 models of the current S-Class worldwide. Compared to the first half of 2023, this represents a decrease of 25 percent. In the USA and Europe, the decline is even 30 percent.
The reasons for this, however, lie less with Mercedes-Benz itself and more in the global market and competition: New brands from Asia (in addition to Genesis, there are also many Chinese suppliers) are increasingly entering the luxury segment, offering slightly more affordable alternatives. Moreover, young wealthy Chinese prefer to buy "new brands," and worldwide, more and more customers are ordering large SUVs or even luxury vans instead of classic sedans. All these developments are accelerating faster than Mercedes-Benz had once assumed: When the EQS and S-Class were planned, it was believed that the EQS could eventually replace the S-Class, and the combustion-engine S-Class still had many customers worldwide. Additionally, Mercedes-Benz has somewhat withdrawn from the taxi and rental car business, where the S-Class was also always a popular choice.
What does this mean?
Pride comes before a fall: Ironically, the margin-generating "luxury models" from Mercedes-Benz are weakening more than expected. Especially in the once very stable and strong Chinese market. And while the EQS has never really performed well due to its lack of representative appearance, the sharp decline in sales of the classic S-Class was unexpected in its intensity.
Translated automatically from German.
Branchenguide
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