Mercedes announces plans for significant savings and job cuts with an agreement extending protection from compulsory redundancies.
Henry Russell
€5 billion by 2027 amid declining sales.
protection from compulsory redundancies extends to 2035.
including China.
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When the going gets tough, the tough…slim down their workforce and save billions. That’s the latest from Mercedes, as reports highlight the iconic automaker's strategies to tighten its fiscal belt in response to a dicey market environment.
With a target to save €5 billion by 2027, Mercedes is driving into cost-cutting territory. Falling sales and profits are steering the company towards a fiscal overhaul, which includes slimming down global operations, impacting even its booming markets such as China.
According to Wirtschaftswoche, an agreement between Mercedes and its works council has set the stage for workforce reductions. But there's a twist—the company is offering fancier redundancy packages compared to previous layoff rounds. Call it the VIP exit.
The principle here is "double voluntariness." Employees must want to depart and the company must give it a nod, rendering this more like an amicable breakup than a bitter split. Also in this deal, employees have agreed to forgo about half the planned wage bumps in exchange for job security—Mercedes promises no compulsory layoffs until 2035 (an extension from the originally planned 2030).
Notably, this isn't just a home-turf move; Mercedes is eyeing cutbacks across the globe, with China included in its cost-reduction roadmap. As markets get tougher, navigating with a new financial compass becomes inevitable for the Stuttgart-based giant.
While the Mercedes brass has been mum on further details, spokespersons have confirmed the deal to Wirtschaftswoche. As the carmaker repositions itself, it mirrors industry-wide maneuvers where big names seek leanness over bulk.
The strategy is clear-cut: offering voluntary exits with sweet deals while ensuring long-term job security for those who stay. This approach could set a template for others in the automotive scene, as companies rebalance their books in today's volatile market.
For now, Mercedes drives on with a promise to shield staff from layoffs, all while bracing for the economic road bumps ahead.
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