Mercedes to Save Billions: Slump in China and with Electric Vehicles

The Stuttgart-based car manufacturer Mercedes-Benz is joining the cost-cutting course of German manufacturers like VW, Audi, and Ford and plans to reduce costs by billions in the coming years. According to media reports in the Stuttgarter Zeitung and the Stuttgarter Nachrichten, the manufacturer cited the tense situation in the automotive industry and the globally volatile economic situation as reasons. Solely through increased efficiency can the company remain financially strong and operational. Significant savings in fixed costs have already been achieved, providing a good starting position. However, more is needed. No specific measures have yet been mentioned in internal discussions. In no case is the agreed job security, which excludes compulsory redundancies until 2029, up for negotiation.

Recently, at the end of October, the manufacturer reported a halving of profits in the third quarter to just 1.72 billion euros. Revenue shrank by 6.7 percent to 34.5 billion euros. The brand sold 503,600 cars in the third quarter, one percent less than a year ago. However, sales in the particularly profitable top product segment, which includes the S-Class, fell by 12 percent. In the important Chinese car market, sales decreased by 13 percent to 171,000 cars. Thus, Mercedes continues to sell more than a third of its cars there. 

In the fully electric passenger car segment, Mercedes recorded a very sharp decline: Sales of electric vehicles fell by 31 percent to 42,500 units. The market environment for electric vehicles remains subdued in important markets, the company stated. BMW, on the other hand, continues to make progress in selling fully electric cars: Their sales increased by ten percent in the third quarter to 103,000.