Mercedes, the cost axe arrives: 'Cuts of several billion a year ready'.
After Volkswagen, another German big is ready to take drastic measures: 'Only by increasing efficiency can we remain financially strong'.
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The German carmaker Mercedes-Benz Group has made it known that it intends to cut costs as a result of "weak" activity. "In the coming years we will reduce our costs by several billion euros per year," a group spokesman told Dpa. The spokesman would not say whether Mercedes-Benz is considering layoffs, nor did he specify in which area of the company the cost cuts would fall.
Mercedes-Benz is also affected by the difficult situation in the industry and has to adjust costs, said the company spokeswoman. "The economic situation remains extremely volatile worldwide. Only by sustainably increasing efficiency can we remain financially strong and able to act,' she said. Significant savings, also in fixed costs, have already put the company in a good starting position: 'We are continuing on this path calmly but very consistently,' she added.
The announcement comes after a difficult third quarter for the group, with profits falling sharply: net profit fell 54% to EUR 1.72 billion, while the operating margin was 4.7%, well below the minimum target of 8%. Weak demand, especially in China, and rising model renewal costs weighed heavily. In recent months, the Stuttgart-based company has decided to reshape its strategy between now and 2030, abandoning the production of electric cars exclusively but ensuring a long tail for internal combustion engines into the next decade.
The German automotive industry faces serious difficulties in switching to electric vehicles in the face of increasingly intense competition in China, once a source of strong profits for automotive bigwigs. In the first ten months of the year, according to Acea data, new registrations in the country fell slightly by 0.4 per cent, attributable in particular to the collapse of the battery vehicle market (-26.6 per cent).
Volkswagen is also struggling. The group is trying to implement drastic savings to reduce costs for the core brand, which is suffering from poor sales of electric vehicles and loss of market share in China, its largest market. Negotiations between management and the unions are not going well: workers' representatives, supported by the IG Metall union, have announced warning strikes starting in early December, with the aim of increasing pressure on negotiations. The first meeting of the third round ended in a deadlock.
