According to media reports, Mercedes plans to cut costs by approximately 25% in key markets such as the United States and China.
Mercedes-Benz USA CEO Dimitris Psillakis and HR chief Lars Minns conveyed this message to employees during a company-wide meeting held in late January at the company's headquarters near Atlanta.
A source familiar with the matter stated that Mercedes executives expect fluctuations in the automotive market over the next two to three years. The global cost-cutting initiative, named "Next Level Performance," aims to "prepare for the coming storm."
The source added that this comprehensive cost-reduction effort will affect all business areas of Mercedes, with some departments expected to see budget cuts of up to 30%. Reports also suggest that the initiative could lead to up to 20,000 job cuts worldwide.
In response to these reports, a Mercedes spokesperson declined to comment on the discussions held during the meeting, stating only that the cost-cutting targets for the U.S. market have not yet been finalized.
Cost reductions have become a widespread trend across the automotive industry. Manufacturers such as Volkswagen, Stellantis, and Nissan are laying off employees and shutting down factories due to rising inventories and promotional expenses eroding profits.
Mercedes aims to cut costs by several billion euros annually in the coming years. CFO Wilhelm stated that the company is assessing labor costs. The source also noted that in the U.S., Mercedes is working to "streamline processes and workflows," looking for ways to "save every penny" to reduce expenses and improve efficiency.
In 2024, Mercedes offered voluntary buyout packages for some employees in engineering services and commercial vehicle operations. The company has also restricted hiring, leaving some vacant positions unfilled.
In early February, after restructuring its U.S. dealer operations for the second time in three years, Mercedes dismissed several mid-level managers in its sales department. A company spokesperson declined to comment on personnel matters but stated that the restructuring involved organizational adjustments.
Beyond the cost-cutting measures, executives also addressed the challenges Mercedes faces in the Chinese market during the meeting. They emphasized that the U.S. will continue to "play an important role in supporting the brand."
In 2024, Mercedes' passenger car sales declined sharply due to weak demand in China, its largest single market, and sluggish EV sales in Europe. Preliminary estimates released on January 10 showed that Mercedes' global sales in 2024 totaled 1,983,400 units, a 3% decline. Sales in China fell by 7%, while European deliveries dropped by 3%.
The U.S. business was one of the few bright spots, with sales increasing by 8.9% in 2024 to 324,528 units, the highest level since 2017. However, despite once being the best-selling luxury car brand in the U.S. from 2016 to 2018, Mercedes continues to lose market share to competitors such as BMW and the fast-growing Lexus.
