Mercedes-Benz, German automaker has unveiled its intention to cut multi-billion euros in costs in response to a deteriorating business environment, a report by dpa-AFX posted on MarketScreener has said.
The report quoted a company representative as saying that the auto company in the coming years would reduce its costs by several billion euros a year.
However, specific cost-cutting measures remain undisclosed, and the potential impact on jobs is currently unclear.
The announcement came as the German automotive industry faces challenges, including the transition to electric vehicles and increased competition in the Chinese market.
Mercedes-Benz justified the cost-saving measures by citing the volatile global economic situation.
“The economic situation remains extremely volatile worldwide. Only by sustainably increasing efficiency will we remain financially strong and able to act,” the representative said.
Mercedes-Benz has emphasised the importance of maintaining financial strength through significant savings, including reductions in fixed costs.
“We are continuing along this path calmly but extremely consistently,” the spokesperson added.
Reports from “Stuttgarter Zeitung” and “Stuttgarter Nachrichten,” indicated that the company’s top management had communicated the cost cutting strategy to higher management, though specific actions have not been detailed.
Despite the cost-cutting plans, Mercedes-Benz assured that job security for most employees in Germany remained intact.
The “Zusi 2030” agreement rules out compulsory redundancies until the end of 2029.
In late October, Mercedes-Benz reported a decline in profits for the third quarter, with group profit dropping over 50 per cent year-on-year to N1.72bn ($1.8bn).
Also, its turnover decreased by 6.7 per cent to N34.5bn.
At the time, Harald Wilhelm, its Chief Finance Officer (CFO), noted that these results did not meet the company’s expectations, highlighting the need for cost reductions.
This announcement aligned with similar strategies by other automakers, such as Volkswagen, which is also considering cost reductions to enhance competitiveness.
Volkswagen’s workers union has proposed $1.6 billion in savings, contingent on avoiding plant closures in Germany.
The automaker plans to cut costs by over $17 billion, including potential job cuts at six plants in Germany.
This week, US automotive major Ford announced plans to cut its workforce in Europe by 4,000, with majority in Germany (including 800 in the United Kingdom).
“Mercedes-Benz plans cost reductions amid industry challenges – report” was originally created and published by Just Auto, a GlobalData owned brand.
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