Mercedes-Benz China Confirms Layoffs in a Changing and Challenging Market
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A Mercedes-Benz dealership in Shanghai on Oct. 23, 2024. Photo: Bloomberg
Mercedes-Benz China confirmed Thursday that it is implementing business adjustments, including layoffs, to improve operational efficiency in a challenging and changing market.
The Chinese subsidiary of the German auto giant said restructuring and downsizing were unavoidable, but it pledged to comply with legal regulations and offer affected employees severance packages above market standards along with help finding alternative work.
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- Mercedes-Benz China is restructuring, including layoffs affecting initially 15% of staff, in response to declining sales and profits in the challenging market.
- The company's earnings dropped significantly, with revenues down 4% and a 7% decline in passenger vehicle sales, amid stiff competition from electric vehicle adoption.
- With China's automotive market shifting towards electric vehicles, Mercedes-Benz plans to invest in electrification and smart technology, including new models and a vehicle operating system.
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Who’s Who
- Mercedes-Benz
- Mercedes-Benz China is restructuring, involving layoffs and operational adjustments due to market challenges. The company promises severance packages above market standards. The downturn is attributed to a significant drop in sales and revenue, especially in China. Mercedes-Benz plans to invest in electrification and smart technology, starting local production of new electric models in 2025, and will introduce an autonomous driving technology. The job cuts reflect a broader struggle among traditional luxury automakers in China's market.
- Beijing Mercedes-Benz Sales Service Co. Ltd.
- Beijing Mercedes-Benz Sales Service Co. Ltd. is one of the units affected by Mercedes-Benz China's business adjustments and layoffs. It is experiencing a 15% staff reduction, with employees selected based on performance, due to restructuring efforts aimed at improving operational efficiency amid a challenging market.
- Mercedes-Benz Auto Finance Ltd.
- Mercedes-Benz Auto Finance Ltd. is one of the units affected by Mercedes-Benz China's business adjustments, which include layoffs. The company is facing challenges due to increased competition from external financial institutions. It is part of the restructuring efforts to improve operational efficiency amid declining sales and profits in the Chinese market. Compensation packages for affected employees are above market standards as part of the company's response.
- Audi
- In 2024, Audi experienced a 10.9% decline in sales in China, with total sales dropping to 649,000 units. This downturn is part of a broader trend affecting luxury carmakers as they face competition from the growing dominance of electric vehicles and Chinese domestic brands, which have increased their market share significantly.
- BMW
- In 2024, BMW's sales in China fell 13.4% to 714,500 units. This decline is part of a larger trend in which traditional luxury car brands, including BMW, are facing challenges in the Chinese market as electric vehicles gain popularity. BMW, like other German luxury carmakers, is struggling against increasing competition from domestic electric vehicle manufacturers and the shifting consumer preferences in China.
- Porsche
- Porsche experienced a steep 28% drop in sales in China, selling only 56,000 units in 2024. This decline reflects the broader challenges faced by traditional luxury brands in China's rapidly shifting market towards electric vehicles.
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What Happened When
- 2014：
- Mercedes-Benz's earnings before interest and taxes fell 31% with revenue down 4%, with China being the hardest-hit market.
- July to November 2024：
- The retail penetration rate of new energy vehicles in China exceeded 50% for five consecutive months.
- September 2024：
- Mercedes-Benz announced plans to invest more than 14 billion yuan with Chinese partners to expand its product lineup.
- February 27, 2025：
- Mercedes-Benz China confirmed it is implementing business adjustments, including layoffs.
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