Stuttgart: Mercedes-Benz said Thursday it planned hefty cost cuts after its 2024 profits plunged by almost a third amid a slump in China and weak electric car sales, as Germany’s auto sector reels. The German auto giant’s net profit fell 28 percent from the previous year to 10.4 billion euros ($10.8 billion), while revenues also slid about four percent to 145.6 billion euros. The group announced plans to slash production costs by a tenth by 2027 and also gave a bleak outlook for this year, saying it expected lower sales and leaner profit margins.
According to Bangladesh Sangbad Sangstha, the company is taking significant steps to ensure future competitiveness in an uncertain world. “To ensure the company’s future competitiveness in an increasingly uncertain world, we are taking steps to make the company leaner, faster and stronger,” CEO Ola Kallenius said in a statement. This announcement comes as the latest setback for the German auto industry, which is grappling with a challenging transition to electric ve
hicles, intense competition from local Chinese manufacturers, and diminishing global demand.
The Stuttgart-based group, which employs 166,000 people worldwide, did not immediately disclose details regarding the cost-cutting measures, such as potential job losses. In China, Mercedes’s biggest single market, sales dropped seven percent in 2024. German manufacturers have historically invested heavily in China, relying on it as a significant market for sales and profits. However, the landscape has changed with the rise of successful Chinese rivals like electric carmaker BYD, which are capturing market share with technology-rich models appealing to local consumers.
Overall, Mercedes’s sales fell four percent last year from the previous year, with a notable 23-percent decline in electric vehicle sales. This development highlights the stalled transition to electric vehicles, a challenge weighing heavily on carmakers throughout Europe. Looking ahead to 2025, Mercedes-Benz anticipates slightly lower revenues “in a m
arket environment that remains challenging” as vehicle sales continue to slow. The company expects profit margins to range between six and eight percent this year, down from above eight percent in 2024.
Despite these challenges, the carmaker remains optimistic about the future, expecting sales to recover with the introduction of new and refreshed models. The German auto sector has faced a series of setbacks recently. In December, Volkswagen, Europe’s largest carmaker, announced plans to cut 35,000 jobs in Germany by 2030, although it avoided closing any domestic factories. BMW has also experienced declining profits due to reduced sales in China, and several auto suppliers, including Continental and Bosch, have cut jobs.