Mercedes-Benz China responds to reports of layoffs

Mercedes-Benz China responded to the widely spread layoff rumblings today saying it is carrying out business adjustments which would inevitably affect some personnel, news portal Yicai.com reported.

Several online sources reported that Mercedes-Benz China had interviewed some employees on Wednesday with layoffs affecting some 15 percent of employees. Those laid-off can get severance pay on a "n+9" basis, where "n" represents years worked (monthly salary multiplied by years of service), and "9" an additional nine months' salary. If they fail to join a new company in the next two months, they will also get their March and April salaries from Mercedes-Benz.

The layoffs are said to mainly involve the sales and auto finance systems.

Mercedes-Benz China said today it had been actively carrying out business adjustments in the face of the challenging market environment and the opportunities in the automotive industry transformation, according to Yicai.

The adjustments may include optimizing and streamlining its business processes and the corresponding organizational structures. The integration or reduction of the business will inevitably affect the work arrangements of some employees.

It promised to abide by laws and regulations, negotiating with the employees and providing them follow-up schemes, according to Yicai.

In the website's report, Mercedes-Benz China also said it will go further in applying new digital technologies to empower business operations, improve operational efficiency and streamline business processes. At the same time, it will adjust positions and help employees to learn new skills, while redundant roles will be consolidated or eliminated.

Mercedes-Benz achieved a turnover of 145.6 billion euros (US$152.9 billion) last year, down 4.5 percent from 152.4 billion euros in 2023. Earnings before interest and taxes (EBIT) were 13.6 billion euros, down 30.8 percent from 19.7 billion euros in 2023.

The adjusted EBIT of the Mercedes-Benz passenger car business was 8.7 billion euros, down 5.6 billion euros from the previous year, according to official data.

Mercedes-Benz, BMW and Audi (BBA) remain the top three luxury brands in China in terms of sales volume, but the sales scale has entered a growth bottleneck in the past two years, with terminal selling prices declined significantly.

However, the German auto giant continued to increase investment in China, as its R&D investment in China has reached 10.5 billion yuan, with China R&D developed into the Mercedes-Benz's largest and strongest R&D network outside of Germany, with more than 2,000 R&D experts.

Last October, it announced that it would invest more than 14 billion yuan in China with its Chinese partners.