Mercedes-Benz to layoff employees and reduce salary hikes
What's the story
Mercedes-Benz has struck a deal with its works council to implement cost-cutting measures, including job buyouts and halving planned salary increases.
The carmaker aims to reduce production costs by 10% by 2027, with further cuts expected by 2030.
Despite these changes, the company has assured that there are no plans for redundancies and has extended a job security guarantee until 2034.
Strategy
Job security and outsourcing plans
Although the automaker has not revealed the exact number of job cuts, it confirmed that production workers won't be affected.
CFO Harald Wilhelm had announced at last month's annual results conference that areas like finance, human resources, and procurement would be outsourced.
The strategy includes reducing the workforce by not replacing retirees and negotiating voluntary redundancies.
Goals
Long-term cost reduction plan
Mercedes-Benz's long-term goal is to cut production costs by 10% by 2027 and double the target by 2030.
The plan builds on an existing initiative launched in 2020, which targets a 20% cost reduction between 2019 and 2025.
The European auto industry is facing major challenges at the moment, with many automakers and component manufacturers announcing major cuts.