Källenius cuts costs: billion-euro savings targets due to sales crisis

Mercedes Källenius cuts costs: billion-euro savings targets due to sales crisis

2024-12-22 Source: dpa 2 min Reading Time

Mercedes' business is faltering. The consequence: Costs must be reduced. It's about billions.

CEO Ola Källenius wants to implement a billion-euro savings plan for Mercedes-Benz. He is responding to the company's sales crisis.(Image: Mercedes-Benz AG) — CEO Ola Källenius wants to implement a billion-euro savings plan for Mercedes-Benz. He is responding to the company's sales crisis.
(Image: Mercedes-Benz AG)

The struggling automaker Mercedes-Benz has specified its savings targets: around five billion euros are to be saved by 2027, as reported by "Manager Magazin." By the end of 2025, half of this savings target is to be achieved. A company spokesperson declined to comment on the figures but referred to previous statements that Mercedes intends to reduce its costs by several billion euros annually in the coming years. However, no specific details were mentioned. The cuts are justified by the tense situation in the automotive industry.

The company emphasizes that the current economic situation is extremely volatile worldwide. Only through a sustainable increase in efficiency can one remain financially strong and capable of taking action.

Do not close plants, but "work with demographics"

According to "Manager Magazin," over 20,000 jobs are at risk. The spokesperson strongly disputed this representation but emphasized that no plant closures are planned in Germany. The job security agreement, which applies to the majority of employees in Germany, is not being questioned. This agreement, internally referred to as "Zusi 2030," fundamentally excludes compulsory redundancies until the end of 2029.

However, the company reserves the option to reduce positions that are not refilled. Mercedes CEO Ola Källenius stated in the "Süddeutsche Zeitung" (German newspaper): "We have always worked with demographics and fluctuation. When we have restructured, it was, for example, through severance packages. We are not coming in with a lawnmower approach to say we are reducing by X percent. We examine every aspect and improve our structures."

The supplier Autoneum has acquired a stake in a Chinese company. (Image:Autoneum)

Profit slump due to weakness in China

At the end of October, Mercedes reported a profit slump in the third quarter: The group's earnings fell by more than half compared to the previous year to just over 1.7 billion euros (1.772.930.000 USD), while revenue decreased by 6.7 percent to just under 35 billion euros (36.501.500.000 USD). These financial results did not meet the company's standards, as CFO Harald Wilhelm explained at the time. He also announced a sharper focus on costs and efficiency.

Mercedes is currently facing difficulties primarily in China. The expensive models with the star are not selling as expected there. No improvement is in sight for the current year. However, these high-priced vehicles are the central element of CEO Ola Källenius's strategy, as they have achieved record profits in recent years. With the economic downturn in the People's Republic, affluent Mercedes customers have unexpectedly become more frugal. In addition, the competition from domestic car manufacturers, which was long considered a growth guarantor for German manufacturers in China, is increasing.

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Date: 08.12.2025

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