Mercedes-Benz confirms China layoffs, workforce to be reduced by 15%
Mercedes-Benz confirmed the rumours that it started layoffs on February 25 in China. About 15% of the workforce will be affected, mainly from sales and finance divisions.
“In the face of a challenging market environment and transformation opportunities in the automotive industry, Mercedes-Benz has been actively adjusting its business to improve operational efficiency and market competitiveness continuously,” the company said to the local media, The Paper.
Mercedes-Benz China continues, “The adjustments include optimizing and streamlining business processes and organizational structures to keep the company’s operations lean and resilient and improve operational efficiency.”
On February 26, local media AutoPix reported that Mercedes-Benz started laying off roughly 15% of its workforce in China. On the same day, foregoing media Bloomberg reported the same information, quoting two sources familiar with the matter.
The job reductions will primarily affect the company’s financing and sales divisions. The move comes as the German luxury automaker faces increasing competition in the world’s largest automotive market.
The layoffs will be concentrated in Mercedes-Benz Automobile Finance and Beijing Mercedes-Benz Sales. Chinese institutions, including state-owned banks, are offering more competitive car loan options, making it harder for the company’s finance division to compete, the report noted.
Mercedes-Benz has already begun reducing staff, including opting not to renew contracts for some fixed-term employees. Whether the downsizing will impact Mercedes-Benz’s corporate headquarters in China or its production units operated through joint ventures with local firms remains unclear.
The decision highlights the growing challenges foreign automakers face in China. Established global brands are losing market share to domestic manufacturers, and luxury legacy automakers are affected the hardest. Mecedes-Benz, Porsche, BMW and Audi are facing new competition from Chinese EV startups such as Nio, Huawei’s Maextro, BYD’s Yangwang and even Chinese legacy makers such as Hongqi.
Mercedes-Benz is not alone in reassessing its China strategy. Volkswagen had to introduce a “For China, in China” strategy, acquiring local EV startups and building cars for the local market based on platforms from Chinese EV makers. Porsche China also laid off staff last year as its sales were down for the third consecutive year, selling 56887 cars, down nearly 30% from the previous year. BMW China reduced headcount by not renewing some employee contracts, affecting between 2% and 5% of its workforce, with similar plans expected this year.
Like many legacy makers, Mercedes-Benz struggles to sell its EV in China. In January, it sold 153 units of the EQE sedan, down 78.5% from 715 units a year ago. The EQE SUV sold 179 units, down 87.6% year-on-year and 51,4% down from December.
