German car company Mercedes-Benz has secured an agreement with its works council to offer voluntary buyouts and reduce planned salary increases by half as part of an aggressive cost-cutting strategy.
The move comes as the automaker works to revive earnings amid growing industry pressures.
While the company did not disclose how many jobs will be affected, it did confirm that production workers would be spared and that redundancies are off the table. In exchange, management has extended a job security guarantee until the end of 2034.
In addition, the cost-cutting measures align with Mercedes-Benz’s broader plan to streamline operations and lower expenses. CFO Harald Wilhelm previously outlined plans to outsource functions in finance, human resources, and procurement, which reduces the headcount through retirements and voluntary departures.
Moreover, the automaker aims to cut production costs by 10% by 2027 and achieve a 20% reduction by 2030. This builds on a cost-reduction initiative launched in 2020, which targeted a 20% cut between 2019 and 2025.
Mercedes-Benz’s strategy reflects the broader challenges facing Europe’s auto industry. Carmakers and suppliers across the region are implementing deep cuts, while Germany’s powerful unions resist job reductions, factory closures, and workforce relocations. As the sector navigates economic uncertainty and evolving market dynamics, automakers are under increasing pressure to balance cost efficiency with workforce stability.
