Recent reports indicate that Mercedes-Benz China is planning significant workforce reductions, signaling a potential strategic shift for the automotive giant in response to evolving global market dynamics. This news follows statements from Mercedes-Benz CFO Harald Wilhelm about widespread cost-cutting measures and coincides with a broader industry trend of manufacturers adjusting their strategies in the face of fierce competition and changing market priorities. While Mercedes-Benz China has disputed the scale of the reported cuts, the underlying message points to a recalibration of operations within the region.
According to a Reuters report, initially cited by Bloomberg News, Mercedes-Benz China is allegedly planning to reduce its workforce by 15% by 2027, with some reports suggesting figures as high as 25%. These cuts are reportedly focused on finance and sales divisions within the Chinese market. However, Mercedes-Benz China has officially denied the accuracy of these specific figures.
During a recent earnings call, CFO Harald Wilhelm addressed the competitive nature of the Chinese market and emphasized the company’s proactive approach to navigate economic headwinds. He highlighted strategies such as supply chain optimization and flexible production locations as key tools for Mercedes-Benz to maintain its position in a challenging environment. Wilhelm also pointed to the company’s previous workforce reductions as a successful cost-saving measure, stating, “Look at the workforce reduction, 11%, 15,000 people… [Out of] 10,000 [of those were] white-collar [jobs], which we [have] reduced since 2019. That is obviously a key support to the fixed cost achievement.” This statement underscores the company’s willingness to adjust its workforce to achieve financial targets and operational efficiency. Image alt text: Harald Wilhelm, CFO of Mercedes-Benz, speaking at an investor conference, highlighting workforce reduction as a cost-saving strategy.
Adding another layer to this strategic narrative, CEO Ola Källenius has recently emphasized a growing focus on the U.S. market. Following the earnings call, Källenius stated that Mercedes-Benz “feels American” and aims to expand its presence in the United States. This sentiment suggests a potential geographical pivot, with the company potentially shifting more resources and operations towards the U.S., partly in response to tariff concerns and the desire to capitalize on the American market’s strengths.
Källenius elaborated on the significance of U.S. operations, noting, “We are prepared to continue to invest billions and we want to grow our footprint in the United States, we are committed… A little-known fact — we are one of the major industrial exporters out of the United States. Two-thirds of the vehicles that we make in our Tuscaloosa plant actually go out into the world, a significant part of them obviously to Europe.” This highlights the strategic importance of the U.S. not only as a market but also as a global export hub for Mercedes-Benz. This strategic emphasis on the U.S. market could be interpreted as a contributing factor to potential adjustments in other regions, including China.
Challenges in the EV Sector and Combustion Engine Strategy
The backdrop to these potential workforce adjustments in Mercedes-Benz China also includes the broader challenges faced by automakers in the electric vehicle (EV) market. Mercedes-Benz, like many of its competitors, has invested heavily in the transition to EVs. However, recent market trends indicate a slower than anticipated uptake of EVs, leading to revised strategies across the industry.
Mercedes-Benz’s annual report revealed a restructuring effort for 2025 that prioritizes combustion engine vehicle production alongside EVs. The company plans to launch 19 new combustion engine models alongside 17 battery-electric vehicles. This simultaneous focus on both powertrains suggests a recognition that the transition to an all-electric future may take longer than initially projected, and that combustion engines will remain a significant part of the automotive landscape for the foreseeable future.
Industry experts like Zach Shefska, CEO of CarEdge, suggest that Mercedes-Benz might be recalibrating its EV strategy in response to market realities. Shefska noted, “I think Mercedes-Benz is realizing they went too far upmarket too fast… We know Mercedes went all in on EVs and those have not sold nearly as well as they forecasted.” He points out that brands that did not aggressively push EV adoption or significantly raise prices, like Lexus, are currently in a stronger market position. Image alt text: Zach Shefska, CEO of CarEdge, providing expert commentary on Mercedes-Benz’s strategic adjustments in the automotive market, particularly regarding EV sales and pricing.
Mercedes-Benz’s own sales figures reflect these challenges. In 2024, the company experienced a 23% decline in battery electric vehicle sales, with 185,100 units delivered worldwide. This downturn has led to a revision of their electrification targets. Mercedes-Benz now aims for EVs to constitute up to 50% of total sales by 2030, pushing back the original target of 2025. This adjustment further underscores the complex and evolving nature of the global automotive market and the strategic adaptations being made by major players like Mercedes-Benz, including potential workforce adjustments in key markets like China.
In conclusion, while the exact scale of workforce reductions at Mercedes-Benz China remains debated, the reports, coupled with executive statements and industry trends, point towards a strategic recalibration. This likely involves navigating intense market competition in China, a growing focus on the U.S. market, and a revised approach to electrification that balances EV ambitions with the continued importance of combustion engine vehicles. Mercedes-Benz’s actions reflect a broader industry-wide adjustment to a complex and rapidly changing global automotive landscape.
