Mercedes-Benz Announces Workforce Reductions and Enhanced Severance Packages
Automaker targets over 30,000 employees in a bid to save five billion euros by 2027 amid declining profits.
Mercedes-Benz has initiated a significant plan to reduce its workforce, targeting over 30,000 employees as part of a strategy aimed at achieving savings of approximately five billion euros by 2027. This reduction will largely occur through voluntary departure programs.
According to reports, the company has introduced appealing severance packages to ease the transition for those opting to leave.
Severance amounts will vary based on factors such as age, salary, and length of service, with some packages potentially exceeding 500,000 euros.
The severance offers will mainly focus on employees in indirect areas away from production, including roles such as team leaders and supervisors.
For instance, a team leader with 30 years of service and a monthly salary of 9,000 euros could qualify for severance exceeding the half-million euro mark.
The plan also includes a specialized program for higher management, which expects to see a substantial number of management positions eliminated.
Historically, Mercedes-Benz has provided substantial severance packages during previous restructuring efforts.
In a past initiative known as "Move," an administrative employee aged 47 with 17 years at the company received severance totaling over 418,000 euros.
The current severance program allows for a dual voluntary process, giving the company discretion on accepting applications for severance.
Despite the approaching cuts, there is an emphasis on retaining high-performing employees throughout the restructuring process.
Recently, Mercedes-Benz reported a notable decline in profit, falling by 28% to 10.4 billion euros.
Competitors in the automotive industry have experienced similar profit decreases, with BMW reporting a 37% drop to 7.7 billion euros and Audi seeing a 33% reduction in net income to 4.2 billion euros for the fiscal year 2024.
The works council representing employees at Mercedes-Benz has characterized the restructuring plans as a "horror list." However, a compromise was reached in March between company executives and the council concerning an adjustment program.
A key component of this agreement is a pledge to avoid operational layoffs until 2035, provided that employees agree to forgo a scheduled wage increase and accept a reduced profit-sharing bonus for the year.
In public communications, Mercedes-Benz has affirmed its commitment to a socially responsible approach as it seeks to become a leaner and more agile organization.
The company also plans to enhance its efficiency through increased adoption of artificial intelligence technologies.
The severance program is scheduled to be active from April 2025 through March 2026.
According to reports, the company has introduced appealing severance packages to ease the transition for those opting to leave.
Severance amounts will vary based on factors such as age, salary, and length of service, with some packages potentially exceeding 500,000 euros.
The severance offers will mainly focus on employees in indirect areas away from production, including roles such as team leaders and supervisors.
For instance, a team leader with 30 years of service and a monthly salary of 9,000 euros could qualify for severance exceeding the half-million euro mark.
The plan also includes a specialized program for higher management, which expects to see a substantial number of management positions eliminated.
Historically, Mercedes-Benz has provided substantial severance packages during previous restructuring efforts.
In a past initiative known as "Move," an administrative employee aged 47 with 17 years at the company received severance totaling over 418,000 euros.
The current severance program allows for a dual voluntary process, giving the company discretion on accepting applications for severance.
Despite the approaching cuts, there is an emphasis on retaining high-performing employees throughout the restructuring process.
Recently, Mercedes-Benz reported a notable decline in profit, falling by 28% to 10.4 billion euros.
Competitors in the automotive industry have experienced similar profit decreases, with BMW reporting a 37% drop to 7.7 billion euros and Audi seeing a 33% reduction in net income to 4.2 billion euros for the fiscal year 2024.
The works council representing employees at Mercedes-Benz has characterized the restructuring plans as a "horror list." However, a compromise was reached in March between company executives and the council concerning an adjustment program.
A key component of this agreement is a pledge to avoid operational layoffs until 2035, provided that employees agree to forgo a scheduled wage increase and accept a reduced profit-sharing bonus for the year.
In public communications, Mercedes-Benz has affirmed its commitment to a socially responsible approach as it seeks to become a leaner and more agile organization.
The company also plans to enhance its efficiency through increased adoption of artificial intelligence technologies.
The severance program is scheduled to be active from April 2025 through March 2026.
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