Massive job cuts now also at Mercedes-Benz in Stuttgart
The next big blow in the struggling automotive industry: Mercedes-Benz has to save money. After the Stuttgart-based carmaker's latest profit warning, the first concrete effects are now becoming apparent. The company is cutting costs: As Wirtschaftswoche reports, the vans division in Stuttgart has already started a voluntary program for more than 500 sales employees. The goal is to cut around ten percent of jobs.
Mathias Geisen, head of the Vans division, had already announced last year that he wanted to reduce fixed costs by 20 percent by 2025 compared to 2019. The job cuts were probably just the beginning. It could become a "blueprint for other departments of the group," writes Wirtschaftswoche.
On September 19, Mercedes-Benz surprisingly lowered its profit forecast for the full year. The main reason for this was the worsening economic situation in China, which is accompanied by a decline in demand. The free cash flow of the industrial business is also expected to be significantly lower than in the previous year.
Until now, the company had only expected a moderate decline here. For 2024, the company now expects a margin of 7.5 to 8.5 percent, significantly reduced from the ten to eleven percent previously expected. The profit warning primarily affects Mercedes' passenger car division. Van sales are less dependent on China.
The Chinese market is of crucial importance for Mercedes-Benz. In 2023, the Group sold around 737,000 vehicles in China, which corresponds to a share of 29.59 percent of global sales of 2.491 million vehicles.
But the decline in sales in the first half of 2024 is noticeable: with only 341,500 vehicles sold in China, Mercedes-Benz recorded a decline of nine percent compared to the same period last year. The high-priced models in particular are suffering from the collapse in demand, which is closely linked to the subdued economic sentiment in China. As a result, Mercedes was forced to offer high discounts in order to remain competitive - in the face of growing competition from Chinese brands such as BYD, Geely, NIO and SAIC.
The German car industry is in crisis due to high costs and a lack of demand. Volkswagen had to announce a massive austerity program a few weeks ago. For the first time, factory closures in Germany were also on the table. BMW had to revise its profit forecast downwards almost simultaneously and recall 1.5 million cars.
Source: Apollo News
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