Mercedes plans to cut more jobs as Chinese competition bites

By the Editorial Team · Thursday, October 29, 2026

Mercedes-Benz will restart a voluntary redundancy program in Germany to lower fixed costs amid declining sales in China and intense global competition. The move is part of broader restructuring efforts as the company adapts its large German workforce and organizational structure to current revenue challenges while maintaining its presence in the critical Chinese market.

Mercedes-Benz is set to resume a voluntary redundancy program in Germany as part of measures to reduce fixed costs amid intensifying competition and declining demand in China, the company’s chief executive said Wednesday. Ola Kaellenius announced the decision during an earnings call presenting the automaker’s third-quarter results, noting ongoing discussions with unions regarding further cost-cutting efforts.

Germany remains a key market for the premium carmaker, accounting for around 15% of its sales. However, about two-thirds of Mercedes-Benz’s workforce and organizational structures are based in the country, creating cost challenges. Kaellenius did not specify the number of job cuts planned but emphasized the importance of adjusting company structures to align with current revenue levels.

The announcement follows a profit warning Mercedes-Benz issued Tuesday, reflecting difficulties in China—the world’s largest automotive market—where fierce competition among more than 100 carmakers has intensified pricing pressures. Despite a nearly 30% rise in net profit to 1.52 billion euros ($1.69 billion) in the third quarter, overall sales fell 4.5% to 30.7 billion euros, largely due to the slump in China.

Kaellenius stressed that despite these challenges, Mercedes-Benz cannot afford to withdraw from the Chinese market. “If you’re a global car company like Mercedes, there’s not a play where you put China aside,” he said.

The cost pressures experienced in Germany stand in contrast to lower labor expenses in China, as well as in Hungary, Romania, and the United States. Eastern Europe was highlighted by Kaellenius as a region open to expansion by industrial companies.

Mercedes-Benz is the latest among Germany’s leading car manufacturers to issue profit warnings and announce restructuring plans. BMW has outlined a voluntary redundancy scheme targeting 8,000 job cuts by the end of 2027. Meanwhile, Volkswagen Group plans to reduce its global workforce by 120,000 employees by 2030 across its brands, which include Porsche and Audi.

Kaellenius concluded that while discussions with employee representatives are ongoing, the company remains committed to decisively reshaping its operations to control costs amid a challenging global automotive landscape.

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