Mercedes-Benz China is set to reduce its workforce costs by 25% for office-based roles by 2027, according to Reuters.
The German luxury carmaker is also planning to cut 10-15% of its sales and finance positions in the country as part of a broader cost-cutting initiative. However, the approximately 2,000 employees in research and development (R&D) roles will remain unaffected.
The move comes as Mercedes-Benz faces mounting pressure from domestic rivals in China, particularly in the electric vehicle (EV) sector, where local manufacturers are rapidly gaining market share. Despite the workforce reductions, the automaker intends to significantly increase its investment in China over the coming years to safeguard and expand its presence in the world’s largest automotive market.
The source, who requested anonymity due to lack of authorisation to speak to media, revealed that Mercedes-Benz is also exploring deeper partnerships with local suppliers to enhance the competitiveness of its products. The cost-cutting measures, however, remain flexible and could be adjusted depending on market conditions.
Workforce reductions in China align with Mercedes-Benz’s global strategy to streamline operations and improve profitability. Last week, the company warned that its 2025 earnings would fall significantly compared to 2023 levels.
During the company’s recent earnings call, Chief Financial Officer Harald Wilhelm highlighted the financial health of Mercedes-Benz’s joint venture with state-owned BAIC Motors, known as BBAC. The venture, which employs production workers in China, aims to reduce material costs by over 10% and production costs by more than 20%.
In addition to cost reductions, Mercedes-Benz is accelerating its localisation efforts in China and the United States to shield itself from escalating trade tensions between the two economic powerhouses. By increasing local production, the company aims to reduce dependency on global supply chains and better cater to regional market demands.
