Frankfurt: 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.
“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.
It was the latest bad news from one of the country’s car titans, which are reeling from a stuttering shift to electric vehicles, fierce competition in China from local rivals and weakening demand elsewhere.
The fading fortunes of the auto sector have become symbolic of a broader malaise affecting Europe’s struggling top economy — a key battleground ahead of a general election at the weekend.
The Stuttgart-based group, which employs 166,000 people worldwide, did not immediately give details on the cost-cutting drive, such as on potential job losses.
– Gloomy outlook –
In China, Mercedes’s biggest single market, sales dropped seven percent in 2024.
German manufacturers all invested heavily in China in recent decades and came to rely on the world’s biggest auto market for a hefty chunk of their sales and profits.
But the picture has changed dramatically, with successful Chinese rivals, such as electric carmaker BYD, rapidly eroding foreign manufacturers’ market share, as they offer technology-packed models that appeal to local consumers.
Car sales have also been lacklustre in general in the world’s second-biggest economy as it battles a slowdown.
