Automotive

Mercedes, sales drop in China and the US. Electric production to Hungary

The group is focusing on Eastern Europe to reduce costs and boost profitability, while in Germany incentive exit programmes are proceeding

by Finance Review

7 October 2025

3' min read

Translated by AI

Versione italiana

Key points

Factories, slimming cure in Germany for Hungary
The campaign for incentive exits in Germany

3' min read

Translated by AI

Versione italiana

The slowdown in demand in China and trade tensions with the United States are reflected in the deliveries, and therefore the accounts, of Mercedes-Benz. In the third quarter of 2025, the German group's global deliveries fell by 12% year-on-year to 441,500 vehicles. In China, the drop was 27%, in the United States 17%. The German automotive luxury is suffering from competition from local brands, which dominate the market with more affordable and technologically advanced models.

The group's electric range is showing mixed signals. In the quarter, sales of battery-powered vehicles (Bev) remained stable at 42,600 units compared to the previous year, despite a 22% increase over the second quarter thanks to the new electric CLA. The EQS and EQE flagship models, designed to compete with Tesla (in decline in Europe, apart from the rebound in September) and the Chinese premium brands (on the rise), have not found favour with the public, however, fuelling doubts about the strategy of shifting to the higher-margin top end, as desired by CEO Ola Källenius for the transition to electric.

"Market conditions in China have significantly affected our sales," admitted group board member Mathias Geisen, mentioning, however, that the European and South American markets have held up well. But the slowdown in the two main non-European regions has prompted Mercedes to take action on the industrial structure and costs.

Factories, slimming cure in Germany for Hungary

It is precisely this need that is favouring the reduction of jobs in Germany and the increase in Hungary. InKecskemét, where more than 4,500 people already work, Mercedes will expand production and hire around 3,000 employees. The factory, which has been in operation since 2012, will produce the electric C-Class - expected in the second quarter of 2026 and based on the new MB.EA platform - and the new GLB, in electric and hybrid versions. The Hungarian share of European production will rise from 15% to 30%, with volumes of between 300,000 and 400,000 units per year.

The German plants in Sindelfingen, Rastatt and Bremen will remain at around 200,000 each. The cuts, agreed with the works councils, have so far mainly affected temporary workers. In Sindelfingen, Mercedes-Benz's main plant in Germany, a strategic line remains, however: assembly of the new, fully electric, four-door AMG GT will begin in 2026.

The business plan is part of the 'Next Level Performance' savings strategy (presented publicly on Capital Market Day in February 2025), which aims to achieve permanent savings of five billion euros per year from 2027 onwards. The transfer of capacity to Eastern Europe and the rationalisation of production should reduce costs by around 10 per cent, according to CFO Harald Wilhelm.

The Campaign for Incentivised Exits in Germany

The programme also includes an extensive incentive exit campaign. Mercedes has sent letters to around 40,000 employees in the development and administration departments, offering severance payments of up to EUR 500,000 based on role and seniority. In the first half of 2025 alone, around EUR 560 million has been earmarked for these measures.

Despite the adjustment phase, the Stuttgart-based company maintains a two billion euro investment plan to launch new models in the next two years: a revamped S-Class, an electric E-Class and a compact version of the G-Class with electric drive.

"We are convinced that we are well positioned as a German industry and as Mercedes-Benz, even in China," commented Jörg Burzer, head of production. The goal remains twofold: to defend profitability and to regain competitiveness in the global electric market, which is today dominated by Asian manufacturers. (Al.An.)